Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama Sales $ 11,000,000 $ 40,000,000 Net operating income $ 880,000 $ 4,000,000 Average operating assets $ 2,750,000 $ 20,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 18%. Compute the residual income for each division. 3. Is Yokohama’s greater amount of residual income an indication that it is better managed? REQUIRED 1 For each division, compute the return on investment (ROI) in terms of margin and turnover. Osaka Yokohama ROI % % REQUIRED 2 Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 18%. Compute the residual income for each division. Osaka Yokohama Residual income REQUIRED 3
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama Sales $ 11,000,000 $ 40,000,000 Net operating income $ 880,000 $ 4,000,000 Average operating assets $ 2,750,000 $ 20,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 18%. Compute the residual income for each division. 3. Is Yokohama’s greater amount of residual income an indication that it is better managed? REQUIRED 1 For each division, compute the return on investment (ROI) in terms of margin and turnover. Osaka Yokohama ROI % % REQUIRED 2 Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 18%. Compute the residual income for each division. Osaka Yokohama Residual income REQUIRED 3
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 1CE: Forchen, Inc., provided the following information for two of its divisions for last year: Required:...
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Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:
| Division | ||||
| Osaka | Yokohama | |||
| Sales | $ | 11,000,000 | $ | 40,000,000 |
| Net operating income | $ | 880,000 | $ | 4,000,000 |
| Average operating assets | $ | 2,750,000 | $ | 20,000,000 |
Required:
1. For each division, compute the
2. Assume that the company evaluates performance using residual income and that the minimum required
3. Is Yokohama’s greater amount of residual income an indication that it is better managed?
REQUIRED 1
For each division, compute the return on investment (ROI) in terms of margin and turnover.
|
|
|
REQUIRED 2
Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 18%. Compute the residual income for each division.
|
|
|
REQUIRED 3
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