Company BCD has two departments where Net Income, Assets and Return on Investment (ROI) is tracked. Compute ROI. Net Income Average Assets ROI Dept A $350,000 $900,000 ____________ Dept B $100,000 $550,000 ____________ The company is implementing a target income of 10% of average assets. Compute the target income and residual income (loss) for each department. Net Income Average Assets Target Income Residual Income (Loss) Dept A $350,000 $900,000 ____________ ____________ Dept B $100,000 $550,000 ____________ ____________ please dont provide answer in an image format thank you

Company BCD has two departments where Net Income, Assets and Return on Investment (ROI) is tracked. Compute ROI. Net Income Average Assets ROI Dept A $350,000 $900,000 Dept B $100,000 $550,000 The company is implementing a target income of 10% of average assets. Compute the target income and residual income (loss) for each department. Net Income Average Assets Target Income Residual Income (Loss) Dept A $350,000 $900,000 Dept B $100,000 $550,000 please dont provide answer in an image format thank you

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 5PA: Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an...

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Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. A. In the correct format, prepare the income statement using the following information: B. Calculate the profit margin, return on investment, and residual income. Assume an investment base of $100,000 and 6% cost of capital. C. Prepare a short response to accompany the income statement that explains why uncontrollable costs are included in the income statement.
Deuk Seon have the following investment centers. Several items are missing from the following table of rate of return on investment and residual income. Determine the missing items, identifying each item by the appropriate letter. Department Invested Assets Income from Operations Rate of Return on Investment Min. Rate of Return Min. Amt. of Income from Operations Residual Income Taek (a) (b) (c) 16% P128,000 P10,000 Jung Hwan P850,000 P153,000 (d) 12% (e) (f) Sun woo P825,000 (g) 20% (h) (i) P24,000 Dong Ryong (j) P129,000 24% (k) P60,000 (l) (a) Determine the missing items, identifying each by number. (b) Which division is most profitable in terms of income from operations? (c) Which division is most profitable in terms of rate of return on investment?
For its three investment centers, Indigo Company accumulates the following data: Sales Controllable margin Average operating assets 1 $2,400,000 $4,800,000 $4,800,000 1,560,000 2.208,000 6,000,000 9,600,000 The return on investment i 11 Compute the return on investment (ROI) for each center. % 111 4,080,000 12,000,000 HE %
Coolbrook Company has the following information available for the past year: River Stream Division Division Sales revenue $1,200,000 900,000 $1,800,000 1,300,000 Cost of goods sold and operating expenses Net operating income $ 300,000 $ 500,000 Average invested assets $1,200,000 $1,800,000 The company's hurdle rate is 6 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: a. Operating income increases by 10 percent. b. Operating income decreases by 10 percent. c. The company invests $250,000 in each division, an amount that generates $100,000 additional income per division. d. Coolbrook changes its hurdle rate to 10 percent. Complete this question by entering your answers in the tabs below. Req 1 Reg 2A Req 28 Reg 20 Reg 2D Calculate return on investment (ROI) and residual income for each division for last year. (Enter your ROI…
Assume a company reported the following information: Sales Minimum required rate of return on average operating assets Turnover Return on investment (ROI) The residual income is closest to: Multiple Choice O O O $14,800. $10,800. $16,800. $20,800. $ 900,000 9.2% 1.5 12%
The following information is related to the current operation of Kenanga Branch. Operating income 5,000,000 Sales revenue 62, 500,000 Average operating asset 25,000,000 Average balance in current liabilities 13,400,000 The management of the company has decided that the minimum return required is 11 percent. Residual income is another approach that can be used to measure performance of an investment centre. Define residual income and determine the residual income for Kenanga Branch.
Data Sales Net operating income Average operating assets Minimum required rate of return Enter a formula into each of the cells marked with a ? below Review Problem: Return on Investment (ROI) and Residual Income Compute the ROI Margin Turnover ROI Compute the residual income Average operating assets $25,000,000 $3,000,000 $10,000,000 25% Net operating income Minimum required return Residual income ? ? ? ? ? ? ?
The Custodial Division of Clark's Corporate Services (CCS) has assets of $1.2 million. During the past year, the division had profits of $228,000. CCS has a cost of capital of 7.5 percent. Ignore taxes. Required: a. Compute the divisional ROI for the Custodial Division. b. Compute the divisional RI for the Custodial Division. Complete this question by entering your answers in the tabs below. Required A Required B Compute the divisional ROI for the Custodial Division. Divisional ROI % Required A Required B >
The following data are available for Segment X of XYZ Company: Net income of the segment $50,000 Contribution to indirect expenses 40,000 Controllable income by manager 48,000 Assets directly used by the manager 360,000 Assets under the control of the segment 240,000 manager Determine the return on investment for evaluating 1. the income performance of the manager of Segment X and 2. the rate of income contribution of the segment. Answer:
GGX is the general manager of the Jung Division, and his performance is measured using the residual income method. GGX is reviewing the following forecasted information for the division for next year. Category Amount (thousands) Working capital P 1,800 Revenue 30,000 Plant and equipment 17,200 To establish a standard of performance for the division’s manager using the residual income approach, four scenarios are being considered. Scenario 1 assumes an imputed interest charge of 12% and a target residual income of P1,500,000. Scenario 2 assumes an imputed interest charge of 15% and a target residual income of P2,000,000. Scenario 3 assumes an imputed interest charge of 18% and a target residual income of P1,250,000. Scenario 4 assumes an imputed interest charge of 10% and a target residual income of P2,500,000. What is the residual income for scenario 2?
Coolbrook Company has the following information available for the past year: River Division Stream Division Sales revenue $ 1,209,000 $ 1,810,000 Cost of goods sold and operating expenses 900,000 1,286,000 Net operating income $ 309,000 $ 524,000 Average invested assets $ 1,200,000 $ 1,460,000 The company’s hurdle rate is 6.26 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)) river steam ROI % % Residual income (loss) 2. Recalculate ROI and residual income for the division for each independent situation that follows: Operating income increases by 11 percent. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss…
For its three investment centers, Gerrard Company accumulates the following data: I II III Sales $2,000,000 $4,000,000 $4,000,000 Controllable margin 1,400,000 2,000,000 3,600,000 Average operating assets 5,000,000 8,000,000 10,000,000 Compute the return on investment (ROI) for each center. I II III The return on investment enter percentages % enter percentages % enter percentages %