Homework Answers
Solution
| Residual Income | ||
| a | Division A | $ 9,380.00 |
| Division B | $ 3,570.00 | |
| b | The division that increased the company's profitability more is | Division A |
Working
| Division A | Division B | ||
| A | Average operating assets | $ 54,000.00 | $ 41,000.00 |
| B | Desired rate of return | 13% | 13% |
| C=A x B | Desired income | $ 7,020.00 | $ 5,330.00 |
| D | Actual income | $ 16,400.00 | $ 8,900.00 |
| E=C-D | Residual income | $ 9,380.00 | $ 3,570.00 |
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Walton Cough Drops operates two divisions. The following information pertains to each division for 2018: Sales...
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Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains...
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Required:
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the minus sign.
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Washington Company has two divisions: the Adams Division and the
Jefferson Division. The following information pertains to last
year's results:
Adams Division Jefferson Division
Net (after-tax) income $611,050 $359,100
Total capital employed 4,720,000 3,672,500
Washington's actual cost of capital was 11%.
Required:
1. Calculate the EVA for the Adams Division. If required, enter
a negative EVA as a negative number by entering your answer with
the minus sign.
$
2. Calculate the EVA for the Jefferson Division. If required,
enter...
ABC Company operates two divisions with the following sales and
expense information for the month of August:
Division 1: sales, $144,000; contribution margin ratio, 50%; direct
fixed expenses, $30,000.
Division 2: sales, $98,000; contribution margin ratio, 70%; direct
fixed expenses, $19,000.
ABC Company’s total fixed expenses during August was
$121,600.
Required:
Prepare a segmented income statement for ABC Company to determine
the segment margin for Divisions 1 and 2 and the operating income
for ABC Company.
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