Safari Equipment Company has several divisions that are investment centers. Data for the Boat Division and...
Safari Equipment Company has several divisions that are investment centers. Data for the Boat Division and the Trailer Division are shown here:
|
Boat Division |
Trailer Division |
|
|
Operating income |
$80,000 |
$50,000 |
|
Total assets at Jan. 1 |
$680,000 |
$215,000 |
|
Total assets at Dec .31 |
$780,000 |
$200,000 |
Which of the following statements would be the most meaningful interpretation of this data?
A.
The Boat Division uses its assets less efficiently than the Trailer Division does because it has a lower return on investment.
B.
The Boat Division is financially more successful than the Trailer Division because it shows an increase in assets.
C.
The Boat Division's performance is better than that of the Trailer Division because it has higher assets.
D.
The Boat Division shows a more efficient use of assets than the Trailer Division because it has a higher operating income.
Homework Answers
| Average operating assets: | ||||
| Boat Division | 730000 | =(680000+780000)/2 | ||
| Trailer Division | 207500 | =(215000+200000)/2 | ||
| Boat Division | Trailer Division | |||
| Operating income | 80000 | 50000 | ||
| Divide by Average operating assets | 730000 | 207500 | ||
| Return on investment | 10.96% | 24.10% | ||
| The Boat Division uses its assets less efficiently than the Trailer Division does because it has a lower return on investment. | ||||
| Option A is correct | ||||
Add Answer to:
Safari Equipment Company has several divisions that are
investment centers. Data for the Boat Division and...
The Labrador Falls Company has three divisions: A Division, B Division, and C Division. A B...
The Labrador Falls Company has three divisions: A Division, B Division, and C Division. A B C Sales $ 323,000 $ 543,000 ? Net operating income 61,500 ? $ 24,300 Residual income ? 37,500 14,700 Average Division Assets ? ? 81,500 Cost of Capital 12 % 10 % ? Profit Margin 20 % 4 % ? Asset Turnover ? 1 ? Return on investment 15 % ? ? What was A Division's residual income last year?
Optimus Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for...
Optimus Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2020, and relevant budget data are as follows. Actual Comparison with Budget $1,400,000 $101,000 favorable Sales Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative expenses 680,000 55,000 unfavorable 124,000 24,000 unfavorable 169,000 On...
Solomon Technologies, Inc. has three divisions. Solomon has a desired rate of return of 12.0 percent....
Solomon Technologies, Inc. has three divisions. Solomon has a desired rate of return of 12.0 percent. The operating assets and income for each division are as follows: Divisions Operating Assets Operating Income Printer $ 680,000 $ 109,480 Copier 950,000 100,700 Fax 500,000 67,500 Total $ 2,130,000 $ 277,680 Solomon headquarters has $134,000 of additional cash to invest in one of its divisions. The division managers have identified investment opportunities that are expected to yield the following ROIs: Expected ROIs...
The vice president of operations of Recycling Industries is evaluating the performance of two divisions organized...
The vice president of operations of Recycling Industries is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Business Division Consumer Division Sales $2,200,000 $2,490,000 Cost of goods sold 1,260,000 1,335,000 Operating expenses 698,000 831,300 Invested assets 1,100,000 2,490,000 1. Prepare condensed divisional income statements for the year ended December 31, 20Y8, assuming that there were no service department charges. Recycling Industries...
Terra company has two divisions, the retail division and the wholesale division. The following information was...
Terra company has two divisions, the retail division and the wholesale division. The following information was gathered for the two divisions for the current year Operating income for retail division-6,200,000. Op. income for wholesale division-2,700,000. Operating assets for retail division-36,200,000. Op. assets for wholesale division 16,200,000. What is the ROI. A-17.3 B-33.79 C-16.98 D-16.67
The Greco Company is decentralized, and divisions are considered investment centers. Greco has one division that manufa...
The Greco Company is decentralized, and divisions are considered investment centers. Greco has one division that manufactures oak dining room chairs with upholstered seat cushions. The Chair Division cuts, assembles, and finishes the oak chairs and then purchases and attaches the seat cushions. The Chair Division currently purchases the cushions for $25 from an outside vendor. The Cushion Division manufactures upholstered seat cushions that are sold to customers outside the company. The Chair Division currently sells 1,600 chairs per quarter,...
Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of...
Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes Average invested assets Division A Division B Division C $ 1,210,000 $ 1,281,000 $1,316,000 748, 000 941.00 Hui 956,000 83,000 71,000 72,000 67,000 60,000 60,000 11,587,000 2,823,600 4,640,000 Wescott is considering an expansion project in the upcoming year that will...
Munoz Corporation has four divisions: the assembly division, the processing division, the machining division, and the...
Munoz Corporation has four divisions: the assembly division, the processing division, the machining division, and the packing division. All four divisions are under the control of the vice president of manufacturing. Each division has a manager and several departments that are directed by supervisors. The chain of command runs downward from vice president to division manager to supervisor. The processing division is composed of the paint and finishing departments. The May responsibility reports for the supervisors of these departments follow....
Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the...
Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period: Sales Variable expenses Traceable fixed expenses Common fixed expense Total Southern Company Division $418,000 $193,000 $130,880 $ 79,130 $186,000 $ 77,000 $ 79,420 $ 36,670 Northern Division $225,000 $ 51,750 $109,000 $ 42,750 The common fixed expenses have been allocated to the divisions on the basis of sales. The Northern Division's break-even sales is closest to: Multiple Choice O $141.558...
5 Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The...
5 Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Products Division's divisional segment margin is $35,300 and the Export Products Division's divisional segment margin is $87,700. The total amount of common fixed expenses not traceable to the individual divisions is $97,200. What is the company's net operating income (loss)? Multiple Choice $220,200 $123.000 $25,800 ($123,000) Mc Graw Hall Education < Prev 5 of 10 Next > Delisa Corporation has two divisions: Division...
Optimus Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2020, and relevant budget data are as follows. Actual Comparison with Budget $1,400,000 $101,000 favorable Sales Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative expenses 680,000 55,000 unfavorable 124,000 24,000 unfavorable 169,000 On...
Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes Average invested assets Division A Division B Division C $ 1,210,000 $ 1,281,000 $1,316,000 748, 000 941.00 Hui 956,000 83,000 71,000 72,000 67,000 60,000 60,000 11,587,000 2,823,600 4,640,000 Wescott is considering an expansion project in the upcoming year that will...
Munoz Corporation has four divisions: the assembly division, the processing division, the machining division, and the packing division. All four divisions are under the control of the vice president of manufacturing. Each division has a manager and several departments that are directed by supervisors. The chain of command runs downward from vice president to division manager to supervisor. The processing division is composed of the paint and finishing departments. The May responsibility reports for the supervisors of these departments follow....
Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period: Sales Variable expenses Traceable fixed expenses Common fixed expense Total Southern Company Division $418,000 $193,000 $130,880 $ 79,130 $186,000 $ 77,000 $ 79,420 $ 36,670 Northern Division $225,000 $ 51,750 $109,000 $ 42,750 The common fixed expenses have been allocated to the divisions on the basis of sales. The Northern Division's break-even sales is closest to: Multiple Choice O $141.558...
5 Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Products Division's divisional segment margin is $35,300 and the Export Products Division's divisional segment margin is $87,700. The total amount of common fixed expenses not traceable to the individual divisions is $97,200. What is the company's net operating income (loss)? Multiple Choice $220,200 $123.000 $25,800 ($123,000) Mc Graw Hall Education < Prev 5 of 10 Next > Delisa Corporation has two divisions: Division...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago