The service division of Bridgeport Industries reported the following results for 2022. Sales Variable costs Controllable fixed costs Average operating assets 1. $430,000 258,000 Management is considering the following independent courses of action in 2023 in order to maximize the return on investment for this division. (a) 53,750 Reduce average operating assets by $107,500, with no change in controllable margin. 2. Increase sales $86,000, with no change in the contribution margin percentage. 537,500 Controllable margin Compute the controllable margin and the return on investment for 2022. Return on investment for 2022 $ %

The service division of Bridgeport Industries reported the following results for 2022. Sales Variable costs Controllable fixed costs Average operating assets 1. $430,000 258,000 Management is considering the following independent courses of action in 2023 in order to maximize the return on investment for this division. (a) 53,750 Reduce average operating assets by $107,500, with no change in controllable margin. 2. Increase sales $86,000, with no change in the contribution margin percentage. 537,500 Controllable margin Compute the controllable margin and the return on investment for 2022. Return on investment for 2022 $ %

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

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Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of $30,000, and invested assets of $600000. What is the return on investment for Division A? A. 20% B. 25% C. 33% D. 40%
Required information [The following information applies to the questions displayed below] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets ROI At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics: Sales $ 1,800,000 435,000 1,365,000 1,005,000 $360,000 $ 1,200,000 $360,000 $ 216,000 The company's minimum required rate of return is 10% Contribution margin ratio Fixed expenses 70 of sales. 6. What is the ROI related to this year's investment opportunity?
Company A reported the following results for 2021:Sales $4,000,000Variable costs 3,200,000Controllable fixed costs 300,000Average operating assets 2,500,000 Management is considering the following independent alternative courses of action in 2022 in order to maximize the return on investment for the division.1. Reduce controllable fixed costs by 10% with no change in sales or variable costs.2. Reduce average operating assets by 10% with no change in controllable margin.3. Increase sales $500,000 with no change in the contribution margin percentage.Instructions(a) Compute the return on investment for 2021.(b) Compute the expected return on investment for each of the alternative courses of action.
The Atlantic Division of Oriole Productions Company reported the following results for 2022: Sales Variable costs Controllable fixed costs Average operating assets Management is considering the following independent alternative courses of action in 2023 in order to maximize the return on investment for the division. 1. 2. 3. (a) $4,032,000 3,213,504 314,000 2,514,000 Reduce controllable fixed costs by 10% with no change in sales or variable costs.. Reduce average operating assets by 10% with no change in controllable margin. Increase sales $500,000 with no change in the contribution margin percentage. Compute the return on investment for 2022. (Round answer to 1 decimal place, e.g. 52.5.) Return on Investment Save for Later % Attempts: 0 of 1 used (b) The parts of this question must be completed in order. This part will be available when you complete the part above. Submit Answer
Company A reported the following results for 2021: Sales $4,000,000 Variable costs 3,200,000 Controllable fixed costs 300,000 Average operating assets 2,500,000 Management is considering the following independent alternative courses of action in 2022 in order to maximize the return on investment for the division. Reduce controllable fixed costs by 10% with no change in sales or variable Reduce average operating assets by 10% with no change in controllable Increase sales $500,000 with no change in the contribution margin Instructions Compute the return on investment for 2021 Compute the expected return on investment for each of the alternative courses of action
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales 12440000$ 35550000$ 25550000$ Average operating assets 3110000$ 7110000$ 5110000$ Net operating income 547360$ 639900$ 740950$ Minimum required rate of return 10.00% 10.50% 14.50$ Required: 1.Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2.Compute the residual income for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 11% rate of return. a.If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject? b.If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject?
The South Division of Wiig Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 1. 2. 3. Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. Return on Investment $2,950,000 1,947,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $155,000. Reduce average operating assets by 4%. Action 1 595,000 (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%.) Action 2 5,000,000 Action 3 (b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%.) Return on investment do % % % %
Knowledge Check East Division of Blue Spruce Anchors provided the following information: Contribution margin Controllable margin Average operating assets Minimum rate of return Return on investment $890,000 $395,900 $2,140,000 Compute the return on investment and the residual income. (Round return on investment answer to two decimal places (e.g., 15.25%).) Residual income 9 % %
Kyle Corporation provides the following information for the Product Division and Service Division for the year. Product Division Service Division 420,000 $ 650,000 195,000 245,000 640,000 610,000 14.0% 14.0% Net sales Operating income Average total assets Target rate of return $ Requirement 1. Calculate the return on investment for each division. (Enter answers as a percent rounded to the nearest hundredth percent, X.XX%) The return on investment for the Product Division is The return on investment for the Service Division is Requirement 2. Which division has the highest ROI? % % Requirement 3. Calculate the residual income for each division. (Round answers to the nearest whole dollar.) The residual income for the Product Division is The residual income for the Service Division is Requirement 4. Which division has the highest residual income?
Required information [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 1,400,000 680,000 720,000 440,000 $ 280,000 Average operating assets $ 875,000 At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics: Sales $ 480,000 Contribution margin ratio Fixed expenses 80 % of sales $ 336,000 The company's minimum required rate of return is 15%. 12. What is the residual income of this year's investment opportunity? Residual income
Required information [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 1,400,000 680,000 720,000 440,000 $ 280,000 Average operating assets $ 875,000 At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics: Sales $ 480,000 Contribution margin ratio 80 % of sales $ 336,000 Fixed expenses The company's minimum required rate of return is 15%. 7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? Note: Round your percentage answer to 1 decimal place. Margin %
Required information [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 1,400,000 680,000 720,000 440,000 $ 280,000 Average operating assets $ 875,000 At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics: Sales $ 480,000 Contribution margin ratio 80 % of sales $ 336,000 Fixed expenses The company's minimum required rate of return is 15%. 13. If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year? Residual income