EBK ACCOUNTING PRINCIPLES
13th Edition
ISBN: 9781119411017
Author: Weygandt
Publisher: WILEY
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Chapter 25, Problem 4DIE
a.
To determine
Introduction:
To calculate: Controllable margin and Return on Investments for 2020.
2.
To determine
Introduction: Return on Investment represents the formula used by the management in determining the profitability percentage generated by the activity in which a particular amount of investment is made. It is computed by dividing the controllable margin by the average operating assets.
To calculate: Controllable margin and expected Return on Investments (ROI) for 2021
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The South Division of Wiig Company reported the following data for the current year.
Sales
Variable costs
Controllable fixed costs
Average operating assets
$2,950,000
1,947,000
2.
595,000
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.
3.
5,000,000
1. 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%.
(a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%)
Top management is unhappy with the investment center's return on investment (ROD) 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
1
2
3
(a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%)
Increase sales by $300,000 with no change in the contribution margin percentage.
Reduce variable costs by $160,000
Reduce average operating assets by 3%
Return on Investment
Action 1
(b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, eg.
1.57%)
Action 21
Action 31
Save for Later
%
Return on investment
Attempts: 0 of 1 used Submit Answer
P
"I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division.
"But I want to see the numbers before I make any move. Our division's return on investment (ROI) has led the company for three years,
and I don't want any letdown."
Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with
year-end bonuses given to the divisional managers who have the highest ROIS. Operating results for the company's Office Products
Division for this year are given below:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Divisional average operating assets
The company had an overall return on investment (ROI) of 19.00% this year (considering all divisions). Next year the Office Products
Division has an opportunity to add a new product line that would require an additional investment that would increase average
operating assets by…
Chapter 25 Solutions
EBK ACCOUNTING PRINCIPLES
Ch. 25 - Prob. 1QCh. 25 - Prob. 2QCh. 25 - Prob. 3QCh. 25 - 4. Ken Bay questions the usefulness of a master...Ch. 25 - Prob. 5QCh. 25 - Prob. 6QCh. 25 - Prob. 7QCh. 25 - Prob. 8QCh. 25 - Prob. 9QCh. 25 - Prob. 10Q
Ch. 25 - Prob. 11QCh. 25 - Prob. 12QCh. 25 - Prob. 13QCh. 25 - Prob. 14QCh. 25 - Prob. 15QCh. 25 - Prob. 16QCh. 25 - Prob. 17QCh. 25 - Prob. 18QCh. 25 - Prob. 19QCh. 25 - Prob. 20QCh. 25 - Prob. 21QCh. 25 - Prob. 22QCh. 25 - Prob. 23QCh. 25 - Prob. 24QCh. 25 - Prob. 25QCh. 25 - Prob. 26QCh. 25 - Prob. 1BECh. 25 - Prob. 2BECh. 25 - Prob. 3BECh. 25 - Prob. 4BECh. 25 - Prob. 5BECh. 25 - Prob. 6BECh. 25 - (LO 3) Torres Company accumulates the following...Ch. 25 - Prob. 8BECh. 25 - Prob. 9BECh. 25 - Prob. 10BECh. 25 - Prob. 11BECh. 25 - Prob. 12BECh. 25 - Prob. 1DIECh. 25 - Prob. 2DIECh. 25 - Prob. 3DIECh. 25 - Prob. 4DIECh. 25 - Prob. 1ECh. 25 - E24-2 Crede Company budgeted selling expenses of...Ch. 25 - Prob. 3ECh. 25 - Prob. 4ECh. 25 - Prob. 5ECh. 25 - Prob. 6ECh. 25 - Prob. 7ECh. 25 - Prob. 8ECh. 25 - Prob. 9ECh. 25 - Prob. 10ECh. 25 - Prob. 11ECh. 25 - Prob. 12ECh. 25 - Prob. 13ECh. 25 - Prob. 14ECh. 25 - Prob. 15ECh. 25 - Prob. 16ECh. 25 - Prob. 17ECh. 25 - Prob. 18ECh. 25 - Prob. 19ECh. 25 - Prob. 20ECh. 25 - Prob. 21ECh. 25 - Prob. 1PSACh. 25 - (LO 2) Zelmer Company manufactures tablecloths....Ch. 25 - Prob. 3PSACh. 25 - Prob. 4PSACh. 25 - Prob. 5PSACh. 25 - Prob. 6PSACh. 25 - Prob. 7PSACh. 25 - Service Green Pastures is a 400-acre farm on the...Ch. 25 - Prob. 2EYCTCh. 25 - Prob. 3EYCTCh. 25 - Prob. 4EYCTCh. 25 - Prob. 5EYCTCh. 25 - Prob. 7EYCT
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