Evaluating Divisional PerformanceThe three divisions of Delicious Foods are Snack Goods, Cereal, and Frozen Foods. The divisions are structured as investment centers. The following responsibility reports were prepared for the three divisions for the prior year:Which division is making the best use of invested assets and should be given priority for future capital investments?Assuming that the minimum acceptable return on new projects is 19%, would all investments that produce a return in excess of 19% be accepted by the divisions? Explain.Identify opportunities for improving the company's financial performance.Requirements:V-STATEMENT OF THE PROBLEM Based on the areas of consideration come up with central problem of the case. Or you can enumerate the problems you find and arrange them in order of significance in order to be able to identify the central problem.Always write one-line statement of the problem either a declarative statement form or question form. VI - ALTERNATIVE COURSES OF ACTION Provide at least three alternative courses of action (ACA1, ACA2, and ACA3) as proposed solution to the problem of the case.You may provide brief explanation of each ACA. VII - ALTERNATIVE EVALUATIONEvaluate the proposed alternatives by providing the advantages and disadvantages of each. Your choice should be a defensible one and provide more benefits than all the given alternatives. Alternative Choice The best alternative should be explained in this portion and defended. Recommendation Propose other solutions or strategies you think will also help solve or even prevent the problem from recurring again. VIII-PLAN OF ACTION Provide a program of activities in order to implement the selected course of action.A Gantt chart is recommended for the purpose. Snack GoodsCerealFrozen Foods$ 2,200,000$ 2,520,000(1,122,000)Revenues$2,100,000(976,800)Operating expensesOperating income before_(1,366,600)support department allocations$ 833,400$ 1,398,000$1,123,200Support department allocations:$ (600,000)$ (468,000)$ (300,000)(137,400)$ (437,400)$ 396,000$ 2,000,000PromotionLegalTotal service department charges(243,600)$ (843,600)$ 554,400$ 1,680,000(235,200)$ (703,200)$ 420,000Operating incomeInvested assets$1,750,000

Given: The data is given as below,

Answered: ng the best use of invested assets and…

Cornerstones of Cost Management (Cornerstones Series)

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ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

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Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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Evaluating Divisional Performance

The three divisions of Delicious Foods are Snack Goods, Cereal, and Frozen Foods. The divisions are structured as investment centers. The following responsibility reports were prepared for the three divisions for the prior year:

Which division is making the best use of invested assets and should be given priority for future capital investments?
Assuming that the minimum acceptable return on new projects is 19%, would all investments that produce a return in excess of 19% be accepted by the divisions? Explain.
Identify opportunities for improving the company's financial performance.

Requirements:

V-STATEMENT OF THE PROBLEM

Based on the areas of consideration come up with central problem of the case. Or you can enumerate the problems you find and arrange them in order of significance in order to be able to identify the central problem.
Always write one-line statement of the problem either a declarative statement form or question form.

VI - ALTERNATIVE COURSES OF ACTION

Provide at least three alternative courses of action (ACA1, ACA2, and ACA3) as proposed solution to the problem of the case.
You may provide brief explanation of each ACA.

VII - ALTERNATIVE EVALUATION

Evaluate the proposed alternatives by providing the advantages and disadvantages of each. Your choice should be a defensible one and provide more benefits than all the given alternatives.

Alternative Choice

The best alternative should be explained in this portion and defended.

Recommendation

Propose other solutions or strategies you think will also help solve or even prevent the problem from recurring again.

VIII-PLAN OF ACTION

Provide a program of activities in order to implement the selected course of action.
A Gantt chart is recommended for the purpose.

Snack Goods
Cereal
Frozen Foods
$ 2,200,000
$ 2,520,000
(1,122,000)
Revenues
$2,100,000
(976,800)
Operating expenses
Operating income before
_(1,366,600)
support department allocations
$ 833,400
$ 1,398,000
$1,123,200
Support department allocations:
$ (600,000)
$ (468,000)
$ (300,000)
(137,400)
$ (437,400)
$ 396,000
$ 2,000,000
Promotion
Legal
Total service department charges
(243,600)
$ (843,600)
$ 554,400
$ 1,680,000
(235,200)
$ (703,200)
$ 420,000
Operating income
Invested assets
$1,750,000

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