Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 15, Problem 16E
To determine
Compute the missing figures.
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Requirement 2:
Revise the data in your worksheet as follows:
A
1 Chapter 11: Applying Excel
2
3
Data
4 Sales
5
6
7
Net operating income
Average operating assets
Minumum required rate of return
ROI
If your formulas are correct, you should get the correct answers to the following questions.
a. What is the ROI?
$ 24,000,000
$
3,360,000
$
6,000,000
24%
%
Residual income
b. What is the residual income? (Negative amount should be indicated by a minus sign.)
c. Why is the residual income positive?
The ROI exceeds the minimum required rate of return
1.
Chapter 11: Applying Excel
Data
$ 72,000,000
$ 3,600,000
$ 18,000,000
24%
4
Sales
Net operating income
6.
Average operating assets
7
Minumum required rate of return
If your formulas are correct, you should get the correct answers to the following questions.
a. What is the ROI?
ROI
%
b. What is the residual income? (Nagative amount should be indicated by a minus sign.)
Residual income
c. Why is the residual income negative?
2.
5.
Data
Sales
$25,000,000
Net operating income
$3,000,000
Average operating assets
$9,000,000
Minimum required rate of return
25%
Enter a formula into each of the cells marked with a ? below
Review Problem: Return on Investment (ROI) and Residual Income
Compute the ROI
Margin
?
Turnover
?
ROI
?
Compute the residual income
Average operating assets
?
Net operating income
?
Minimum required return
?
Residual income
?
Chapter 15 Solutions
Survey Of Accounting
Ch. 15 - 1. Pam Kelly says she has no faith in budgets. Her...Ch. 15 - 7. What is a responsibility center?Ch. 15 - Prob. 3QCh. 15 - Prob. 4QCh. 15 - Prob. 5QCh. 15 - 3. When are sales and cost variances favorable and...Ch. 15 - 4. Joan Mason, the marketing manager for a large...Ch. 15 - Prob. 8QCh. 15 - Prob. 9QCh. 15 - Prob. 10Q
Ch. 15 - Prob. 11QCh. 15 - 9. Minnie Divers, the manager of the marketing...Ch. 15 - 6. How do responsibility reports promote the...Ch. 15 - Prob. 14QCh. 15 - Prob. 15QCh. 15 - Prob. 16QCh. 15 - 12. How can a residual income approach to...Ch. 15 - Prob. 18QCh. 15 - Exercise 9-6A Evaluating a profit center Helen...Ch. 15 - Prob. 2ECh. 15 - Prob. 3ECh. 15 - Prob. 4ECh. 15 - Exercise 8-3A Determining amount and type...Ch. 15 - Prob. 6ECh. 15 - Exercise 8-4A Determining sales and variable cost...Ch. 15 - Exercise 8-5A Determining flexible budget...Ch. 15 - Exercise 8-9A Responsibility for the fixed cost...Ch. 15 - Prob. 10ECh. 15 - Exercise 8-7A Evaluating a decision to increase...Ch. 15 - Prob. 12ECh. 15 - Prob. 13ECh. 15 - Exercise 9-9A Residual income Climax Corporation...Ch. 15 - Residual income Gletchen Cough Drops operates two...Ch. 15 - Prob. 16ECh. 15 - Prob. 17ECh. 15 - Prob. 18PCh. 15 - Prob. 19PCh. 15 - Prob. 20PCh. 15 - Prob. 21PCh. 15 - Problem 9-20A Return on investment Sorrento...Ch. 15 - Problem 9-21A Comparing return on investment and...Ch. 15 - Comparing return on investment and residual income...Ch. 15 - ATC 8-1 Business Applications Case Static versus...Ch. 15 - Prob. 2ATCCh. 15 - Prob. 3ATCCh. 15 - ATC 9-1 Business Applications Case Analyzing...Ch. 15 - Prob. 5ATC
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- Chapter 10: Applying Excel: Exercise (Part 2 of 2) Requirement 2: Revise the data in your worksheet as follows: A 1 Chapter 10: Applying Excel 2 3 Data 4 Sales 5 6 7 Net operating income ROI Average operating assets Minumum required rate of return If your formulas are correct, you should get the correct answers to the following questions. a. What is the ROI? Residual income B % c. Why is the residual income positive? $ 64,000,000 $ 7,680,000 $ 16,000,000 25% b. What is the residual income? (Negative amount should be indicated by a minus sign.)arrow_forwardExercise 11-9 (Algo) Return on Investment (ROI) and Residual Income Relations [LO11-1, LO11-2] Supply the missing data for three service companies shown in the table below. Note: Loss amounts should be Indicated by a minus sign. Round your percentage answers to nearest whole percent. Sales Net operating income Average operating assets Return on investment (RO Minimum required rate of return. Percentage Dollar amount Residual income A Company B C S 9,240,000 S 7.400.000 S 306,000 $ 4,880.000 S 3,080,000 S 1,944.000 15 % 18 % 96 13 % 96 S 340,000 18 96 $ 97.200arrow_forwardQUESTION 26 Top management is trying to determine which would be the best choice of the following investment opportunities: Data of investment choices: 1 Sales $10,000,000 Operating income 200,000 Average operating assets 2,000,000 Required: Compute the Residual Income assuming a minimum required rate of return of 8%. $40,000 $0 $50,000 $(40,000)arrow_forward
- Segment profitability analysis The marketing segment sales for Caterpillar, Inc., for a year follow: In addition assume the following information: A. Use the sales information and the additional assumed information to prepare a contribution margin by segment report. Round to two decimal places. In addition, calculate the contribution margin ratio for each segment as a percentage, rounded to one decimal place. B. Prepare a table showing the manufacturing margin, dealer commissions, and variable promotion expenses as a percent of sales for each segment. (Round whole percents to one decimal place.) C. Use the information in (A) and (B) to interpret the segment performance.arrow_forwardchpater 6 question 6 Assume a company with two divisions (A and B) prepared the following segmented income statement: A B Total Sales $ ? $ 200,000 $ ? Variable expenses 120,000 140,000 260,000 Contribution margin ? ? ? Traceable fixed expenses 100,000 ? ? Segment margin $ ? $ (20,000 ) ? Common fixed expenses 50,000 Net operating income $ 10,000 What is the company’s total sales? Multiple Choice $500,000 $600,000 $480,000 $460,000arrow_forwardUse the following information to answer the questions. Company X $ 12,480,000 $ 3,120,000 $ Company Y $ 28,480,000 $ 7,120,000 512,640 8.50% Company Z $ 20,480,000 $ 5,120,000 532,480 10.40% Sales Average operating assets Net operating income Minimum required rate of return 561,600 8.00% Required: 1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each company. 3. Each company is presented with an investment opportunity that would yield a 9% rate of return. a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment opportunity. b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the investment opportunity. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg ЗA Req 3B Compute the return on investment (ROI) for each company…arrow_forward
- QUESTION 25 Top management is trying to determine which would be the best choice of the following: Data of investment choices: 1 Sales $10,000,000 Operating income 200,000 Average operating assets 2,000,000 Required: Compute the Return on Investment 9% 12% 8% 10%arrow_forwardNext > < Prev ats Question 16 --/1 View Policies Current Attempt in Progress pport Sterling, Inc. reports the following financial information for its sports clothing segment. Average operating assets $3,059,000 Controllable margin $672,980 Minimum rate of return 10 % Compute the return on investment and the residual income. Return on investment Residual income %24arrow_forwardAssume a company reported the following results: Sales Variable expenses Contribution margin Fixed expenses $ 400,000 268,000 140,000 40,000 $ 100,000 $ 425,000 Net operating income Average operating assets If the company's minimum required rate of return on average operating assets is 16%, its residual income would be: Multiple Choice $33.000. $35.000. $32.000. $34,000arrow_forward
- Year 1 Return on investment Net operating income Turnover Margin Sales Year 2 12 368 $ 384,000 3 $4,800,000 Del Luna Division's margin in Year 2 was 150% of the margin in Year 1. The turnover for Year 1 was: Oa, 1.2 ь, 1.5 Oc. 3.0 Od. 4.0arrow_forwardQuestion 10.2 Provide the missing data for the following situations: Red Division White Division Green Division Sales A $10,000,000 E Net operating income $240,000 $500,000 $288,000 Total assets B C $1,600,000 Return on investment 0.16 0.10 F Return on sales 0.05 D 0.14arrow_forwardQUESTION 27 Top management is trying to determine which would be the best choice of the following investment opportunities: Data of investment choices: 2 Sales $9,000,000 Operating income 300,000 Average operating assets 3,000,000 Required: Compute the Return on investment 8% 10% 12% 9%arrow_forward
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