Managerial Accounting
Managerial Accounting
7th Edition
ISBN: 9781260247886
Author: Wild
Publisher: MCG
Question
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Chapter 9, Problem 12E

1.

To determine

To compute: Return on investment.

1.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate return on investment,

    Returnoninvestment= Netincome Averageassets ×100 ................(1)

Beverage Division:

Given,
Net income is  $ 349 millions.
Average assets are $2,627.5 million.

Substitute $349 million for net income and $2,627.5 million for average assets in the above equation (1).

    Returnoninvestment= $349millions $2,627.5millions ×100 =13.28%

Hence, return on investment is 13.28%.

Working notes:

Calculation for average assets,

    Averageasset= Openingasset+Closingasset 2 = $2,662million+$2,593million 2 =$2,627.5million

Cheese Division:

Given,
Net income is  $ 634 million.
Average assets are $4,427.5 million.

Substitute $634 million for net income and $4,427.5 million for average assets in the above equation (1).

    Returnoninvestment= $634million $4,427.5million ×100 =14.32%

Hence, return on investment is 14.32%.

Working notes:

Calculation for average assets,

    Averageasset= Openingasset+Closingasset 2 = $4,455millions+$4,400millions 2 =$4,427.5millions

2.

To determine

To compute: Profit margin.

2.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate profit margin,

    ProfitMargin= NetIncome TotalRevenue ×100 ...................(2)

Beverage Division:

Given,
Net income is $349 million.
Total revenue is $2,681 million.

Substitute $349 million for net income and $2,681 million for total revenue in the above equation (2).

    Profitmargin= $249million $2,681million ×100 =9.28%

Hence, profit margin is 7.2%.

Cheese Division:

Given,
Net income is $634 million.
Total revenue is $3,925 million

Substitute $634 million for net income and $3,925 million for total revenue in the above equation (2).

    Profitmargin= $634million $3,925million ×100 =16.15%

Hence, profit margin is 16.15%.

3.

To determine

To compute: Investment turnover.

3.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate investment turnover,

    Investmentturnover= Sales Averageinvestedassets ...............(3)

Beverage Division:

Given,
Sales are $2,681 million.
Average assets invested are $2,627.5 million.

Substitute $349 million for sales and $2,627.5 million for average assets invested in the above equation (3).

    Investmentturnover= $2,681million $2,627.5million =1.02

Hence, investment turnover is 1.02.

Cheese Division:

Given,
Sales are $3,925 million.
Average assets invested are $4,427.5 million.

Substitute $3,925 million for sales and $4,427.5 million for average assets invested in the above equation (3).

    Investmentturnover= $3,925million $4,427.5million =0.88

Hence, investment turnover is 0.88.

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Chapter 9 Solutions

Managerial Accounting

Ch. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Prob. 10DQCh. 9 - Prob. 11DQCh. 9 - Prob. 12DQCh. 9 - Prob. 13DQCh. 9 - Prob. 14DQCh. 9 - Prob. 15DQCh. 9 - Prob. 16DQCh. 9 - Prob. 17DQCh. 9 - Prob. 18DQCh. 9 - Allocation and measurement terms C1 In each blank...Ch. 9 - Basis for cost allocation C1 In each blank next...Ch. 9 - Prob. 3QSCh. 9 - Prob. 4QSCh. 9 - Prob. 5QSCh. 9 - Prob. 6QSCh. 9 - Prob. 7QSCh. 9 - Prob. 8QSCh. 9 - Computing return on investment A1 Compute return...Ch. 9 - Computing residual income A1 Refer to the...Ch. 9 - Prob. 11QSCh. 9 - Computing profit margin and investment turnover A2...Ch. 9 - Performance measures__balanced scorecard A3...Ch. 9 - Prob. 14QSCh. 9 - Prob. 15QSCh. 9 - Prob. 16QSCh. 9 - Prob. 17QSCh. 9 - Prob. 18QSCh. 9 - Prob. 19QSCh. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - Prob. 3ECh. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Exercise 22-16 Performance measures-balanced...Ch. 9 - Prob. 17ECh. 9 - Prob. 18ECh. 9 - Prob. 19ECh. 9 - Prob. 20ECh. 9 - Prob. 21ECh. 9 - Prob. 22ECh. 9 - Prob. 23ECh. 9 - Prob. 1PSACh. 9 - Prob. 2PSACh. 9 - Prob. 3PSACh. 9 - Prob. 4PSACh. 9 - Prob. 5PSACh. 9 - Prob. 1PSBCh. 9 - Prob. 2PSBCh. 9 - Prob. 3PSBCh. 9 - Prob. 4PSBCh. 9 - Prob. 5PSBCh. 9 - Santana Rey’s two departments, computer consulting...Ch. 9 - Prob. 1AACh. 9 - Prob. 2AACh. 9 - Prob. 3AACh. 9 - Prob. 1BTNCh. 9 - Prob. 2BTNCh. 9 - Prob. 3BTNCh. 9 - Prob. 4BTNCh. 9 - Prob. 5BTNCh. 9 - Prob. 6BTN
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