Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Question
Chapter 23, Problem 23.22E
1.
To determine
Return on investment (ROI) is an accounting measure of income divided by an accounting measure of investment. The formula used to determine ROI is given below:
However, ROI can provide more helpful in evaluating the performance when broken into two components as shown below.
To determine: The values that will come in the blanks in the table.
2.
To determine
To state: The changes in the operating income to total assets ratios over 2015 to 2017.
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Performance Aid, Inc. has two divisions: Test Preparation and Language Arts. Results (in millions) for the past three years are partially displayed here:
Q.Use the DuPont method of profitability analysis to explain changes in the operating-income-to-totalassets ratios over the 2015–2017 period for each division and for Performance Aid as a whole. Comment on the results.
Required information
[The following information applies to the questions displayed below.]
ACME Food Manufacturing reports the following for two of its divisions for a recent year.
Cheese
($ millions)
Beverage
Division
Division
Invested assets, beginning
Invested assets, ending
$2,675
2,599
2,687
$4,468
4,406
3,931
Sales
Operating income
355
640
1. Compute return on investment.
2. Compute profit margin.
3. Compute investment turnover for the year.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Compute profit margin. (Enter your answers in millions.)
Profit Margin
Choose Numerator:
Choose Denominator:
Profit Margin
%3D
Investment Center
Profit margin
%3D
Beverage
Cheese
%D
Required information
[The following information applies to the questions displayed below.]
ACME Food Manufacturing reports the following for two of its divisions for a recent year.
($ millions)
Beverage
Division
Cheese
Division
Invested assets, beginning
Invested assets, ending
$2,675
2,599
2,687
$4,468
4,406
3,931
Sales
Operating income
355
640
1. Compute return on investment.
2. Compute profit margin.
3. Compute investment turnover for the year.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Compute return on investment. (Enter your answers in millions.)
Return on Investment
Choose Numerator:
Choose Denominator:
Return on lInvestment
Investment Center
Return on investment
%3D
Beverage
Cheese
II
II
Chapter 23 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 23 - Prob. 23.1QCh. 23 - Prob. 23.2QCh. 23 - What factors affecting ROI does the DuPont method...Ch. 23 - RI is not identical to ROI, although both measures...Ch. 23 - Describe EVA.Ch. 23 - Give three definitions of investment used in...Ch. 23 - Distinguish between measuring assets based on...Ch. 23 - Prob. 23.8QCh. 23 - Why is it important to distinguish between the...Ch. 23 - Prob. 23.10Q
Ch. 23 - Managers should be rewarded only on the basis of...Ch. 23 - Explain the role of benchmarking in evaluating...Ch. 23 - Explain the incentive problems that can arise when...Ch. 23 - Prob. 23.14QCh. 23 - Prob. 23.15QCh. 23 - During the current year, a strategic business unit...Ch. 23 - Assuming an increase in price levels over time,...Ch. 23 - If ROI Is used to evaluate a managers performance...Ch. 23 - The Long Haul Trucking Company is developing...Ch. 23 - ABC Inc. desires to maintain a capital structure...Ch. 23 - ROI, comparisons of three companies. (CMA,...Ch. 23 - Prob. 23.22ECh. 23 - ROI and RI. (D. Kleespie, adapted) The Sports...Ch. 23 - ROI and RI with manufacturing costs. Excellent...Ch. 23 - ROI, RI, EVA. Hamilton Corp. is a reinsurance and...Ch. 23 - Goal incongruence and ROI. Comfy Corporation...Ch. 23 - ROI, RI, EVA. Performance Auto Company operates a...Ch. 23 - Capital budgeting, RI. Ryan Alcoa, a new associate...Ch. 23 - Prob. 23.29ECh. 23 - ROI, RI, EVA, and performance evaluation. Cora...Ch. 23 - Prob. 23.31ECh. 23 - Prob. 23.32ECh. 23 - ROI performance measures based on historical cost...Ch. 23 - ROI, measurement alternatives for performance...Ch. 23 - Multinational firms, differing risk, comparison of...Ch. 23 - ROI, Rl, DuPont method, investment decisions,...Ch. 23 - Division managers compensation, levers of control...Ch. 23 - Executive compensation, balanced scorecard. Acme...Ch. 23 - Financial and nonfinancial performance measures,...Ch. 23 - Prob. 23.40PCh. 23 - Prob. 23.41PCh. 23 - RI, EVA, measurement alternatives, goal...
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