The following data are available for two divisions of Solomons Company.North Division$10,535,00049,000,000South Division$ 47,460,000339,000,000Division operating profitDivision investmentThe cost of capital for the company is 8 percent. Ignore taxes.Required:a-1. Calculate the ROI for both North and South divisions.a-2. If Solomons measures performance using ROI, which division had the better performance?b-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilities.)b-2. If Solomons measures performance using economic value added, which division had the better pc. Would your evaluation change if the company's cost of capital was 17 percent?1. When evaluated by ROI?2. When evaluated by EVA?Complete this question by entering your answers in the tabs below.Req A1DivisionsNorthSouthReg A2estion 12- Hom...Calculate the ROI for both North and South divisions. (Enter your answers as a percentage rounded to 1 de32.1).)ROIReq B1%%Req B2Req C1Reg A1Req C2Req A2 >< Prev12

Answer 1) ROI = Operating profit / investmentsNorth Devision = (10,515,000/49,000,000) x 100 =…

The following data are available for two divisions of Solomons Company. North Division South Division $10,535,000 $ 47,460,000 49,000,000 339,000,000 Division operating profit Division investment The cost of capital for the company is 8 percent. Ignore taxes. Required: a-1. Calculate the ROI for both North and South divisions. a-2. If Solomons measures performance using ROI, which division had the better performance? b-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilitie b-2. If Solomons measures performance using economic value added, which division had the be c. Would your evaluation change if the company's cost of capital was 17 percent? 1. When evaluated by ROI? 2. When evaluated by EVA?

The following data are available for two divisions of Solomons Company. North Division South Division $10,535,000 $ 47,460,000 49,000,000 339,000,000 Division operating profit Division investment The cost of capital for the company is 8 percent. Ignore taxes. Required: a-1. Calculate the ROI for both North and South divisions. a-2. If Solomons measures performance using ROI, which division had the better performance? b-1. Calculate the EVA for both North and South divisions. (The divisions have no current liabilitie b-2. If Solomons measures performance using economic value added, which division had the be c. Would your evaluation change if the company's cost of capital was 17 percent? 1. When evaluated by ROI? 2. When evaluated by EVA?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 11E: The operating income and the amount of invested assets in each division of Conley Industries are as...

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