FINANCIAL+MANAG.ACCT.
9th Edition
ISBN: 9781260728774
Author: Wild
Publisher: RENT MCG
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Textbook Question
Chapter 22, Problem 12QS
Computing
Compute return on investment for each of the division below (each is an investment center). Comment on the relative performance of each investment center.
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below to fill in the blank
The residual income approach to measuring
divisional performance measurement is
closely
related to the
method
of performance measurement.
O a. payback period
O b. economic value added
O c.
return on capital employed
O d.
internal rate of return
O e. accounting rate of return
Please see picture for the full problem and table.
a-1. Evaluate the performance of the two divisions assuming BMI uses return on investment (ROI). (Round your final answers to nearest whole percentage value.)
Evaluate the performance of two divisions assuming UEI uses economic value added (EVA).
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- Compute the return on investment for each divisionarrow_forwardA responsibility center structure that considers investments made by the operating segments by using a common cost of capital percentage is called_______. A. return on investment B. residual income C. a profit center D. a discretionary cost centerarrow_forwardROI, comparisons of three companies. (CMA, adapted) Return on investment (ROI) is often expressed as follows:arrow_forward
- The residual income approach to measuring divisional performance measurement is closely related to the ____________ method of performance measurement. Select one: a. Internal rate of return b. Payback period c. Return on capital employed d. Accounting rate of return e. Economic value addedarrow_forwardA responsibility center structure that considers investments made by the operating segments by using a common cost of capital percentage is called ________. A) residual income B) a profit center C) a discretionary cost center D) return on investmentarrow_forwardA-1. Evaluate the performance of the two divisions assuming BMI uses economic value added (EVA). A-2. Which division had the better performance?arrow_forward
- Explain the benefits of a residual income structure within an investment center framework. It may help to think of an example using an existing company.arrow_forwardHow much is the net operating income contributed to the company by Department A and B? Using the data above, what is the segment margin of Department A and B?arrow_forwardWhich of the following measures the profitability of a division relative to the size of its investment in capital assets? A. residual Income (RI) B. sales margin C. return on investment (ROI) D. economic value added (EVA)arrow_forward
- Return on investment (ROI) could be calculated using which of the following formulas? W Multiple Choice O O X Margin * (Net operating income + Sales) O X O Margin x (Average operating assets + Sales) X Margin * (Sales - Net operating income) Type here to search X Margin × (Sales - Average operating assets) < Prev 2 of 10arrow_forwarda) Based on the information provided, calculate the operating income in good format. Show all calculations. b) Calculate the individual and net Growth Component. c) Calculate the individual and net Price Recovery. d) Calculate the Productivity Component e) Show the reconciliation of the Operating Incomearrow_forwardUse the following information to answer the questions that follow. A. Calculate the operating income percentage for each of the courses. Comment on how your analysis has changed for each course. B. Perform a vertical analysis for each course. Based on your analysis, what accounts would you want to investigate further? How might management utilize this information? C. Which method of analysis (using a dollar value or percentage) is most relevant and/or useful? Explainarrow_forward
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Operating segments; Author: The Finance Storyteller;https://www.youtube.com/watch?v=8IDQtBn902Q;License: Standard Youtube License