Homework Answers
| Q.No. | Correct Option | Reason: |
| Q.1 | Correct Option D i.e. Controllable margin by average operating assets | Controllable margin is the contribution margin less controllable fixed cost. A return of investment and the division profitability can be assed using controllable margin only. |
| Q.2 | Correct Option D i.e. 15% | ROI = Controllable Margin / Average Operating asset |
| =600000 / 4000000 | ||
| 15% | ||
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Problem - Return on Investment Circle one correct letter. Each correct answeris worth 1.5 point(s). 1....
Question 3 (1 point) Las Sendas, Inc. had average operating assets of $4,000,000 and sales of $2,000,000 in 2013. I...
Question 3 (1 point) Las Sendas, Inc. had average operating assets of $4,000,000 and sales of $2,000,000 in 2013. If the controllable margin was $600,000, the ROI was a) 60% b) 50% c) 30% d) 15%
Question 5 (1 point) The denominator in the formula for return on investment calculation is a)...
Question 5 (1 point) The denominator in the formula for return on investment calculation is a) investment center average operating assets. b) sales for the period. c) dependent on the specific type of profit center. d) investment center controllable margin.
Question 2 (1 point) If an investment center has generated a controllable margin of $150,000 and...
Question 2 (1 point) If an investment center has generated a controllable margin of $150,000 and sales of $600,000, what is the return on investment for the investment center if average operating assets were $1,000,000 during the period? a) 45% b) 15% Oc) 60% od) 25%
Do It! Review 10-4 The service division of Raney Industries reported the following results for 2020....
Do It! Review 10-4 The service division of Raney Industries reported the following results for 2020. Sales Variable costs Controllable fixed costs Average operating assets $516,000 309,600 69,060 654,000 Management is considering the following independent courses of action in 2021 in order to maximize the return on investment for this division 1. Reduce average operating assets by $104,640, with no change in controllable margin. 2. Increase sales $112,815, with no change in the contribution margin percentage. Your answer is partially...
2. Point, Inc. produces men's shirts. The following budgeted and actual amounts are for 2018: Cost...
2. Point, Inc. produces men's shirts. The following budgeted and actual amounts are for 2018: Cost Direct materials Direct labor Fixed overhead Budgeted Amounts at 2.500 units Actual Amounts at 2.900 units $55,000 $65,000 $80,000 $83,000 $30,000 $34,500 Prepare a responsibility report for Point, Inc. for the year. POINT, INC. Manufacturing Performance Responsibility Report For the Year Ended December 31, 2018 Budget (2,900 units) Differences Direct Materials Direct Labor Fixed Overhead Total costs Actual $65,000 $83,000 $34,500 3. The service...
Problem 10-20 Return on Investment (ROI) Analysis [LO10-1] The contribution format income statement for Huerra Company...
Problem 10-20 Return on Investment (ROI) Analysis [LO10-1] The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 4,000,000 $ 80.00 Variable expenses 2,800,000 56.00 Contribution margin 1,200,000 24.00 Fixed expenses 840,000 16.80 Net operating income 360,000 7.20 Income taxes @ 30% 108,000 2.16 Net income $ 252,000 $ 5.04 The company had average operating assets of $2,000,000 during the year. Required: 1. Compute the company’s return on investment (ROI) for the...
- Your answer is partially correct. The South Division of Wiig Company reported the following data...
- Your answer is partially correct. The South Division of Wiig Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets $2,955,000 1,973,940 602,200 5,041,000 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. 1 Increase sales...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales $34,670,000 $31,320,000 Operating income 2,773,600 1,252,800 Operating assets, January 1 6,394,000 5,600,000 Operating assets, December 31 7,474,000 6,000,000 Required: 1. For the Small Appliances Division, calculate: a. Average operating assets $ 6,934,000 b. Margin c. Turnover d. Return on investm nent (ROI) 2. For the Cleaning Products Division, calculate:...
31) Which of the following will not result in an increase in return on investment (ROI),...
31) Which of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same? A) A reduction in expenses. B) An increase in net operating income. C) An increase in operating assets. D) An increase in sales. 32) Tennill Inc. has a $1,400,000 investment opportunity with the following characteristics: Sales $ 4,480,000 40 % of sales Contribution margin ratio Fixed expenses S 1,657,600 The ROI for this year's investment opportunity is closest...
Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Problem 11-15 Return on Investment...
Problem 11-15 Return on Investment (ROI) and Residual Income
[LO11-1, LO11-2]
Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Ending Balance Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance sheet Beginning Balance Assets Cash $ 125,000 Accounts receivable 339,000 Inventory 570,000 Plant and equipment, net 826,000 Investment in Buisson, S.A. 398,000 Land (undeveloped) 250,000 Total assets $ 2,508,000 Liabilities and stockholders' Equity Accounts payable $ 371,000 Long-term debt 976,000...
Question 3 (1 point) Las Sendas, Inc. had average operating assets of $4,000,000 and sales of $2,000,000 in 2013. If the controllable margin was $600,000, the ROI was a) 60% b) 50% c) 30% d) 15%
Question 5 (1 point) The denominator in the formula for return on investment calculation is a) investment center average operating assets. b) sales for the period. c) dependent on the specific type of profit center. d) investment center controllable margin.
Question 2 (1 point) If an investment center has generated a controllable margin of $150,000 and sales of $600,000, what is the return on investment for the investment center if average operating assets were $1,000,000 during the period? a) 45% b) 15% Oc) 60% od) 25%
Do It! Review 10-4 The service division of Raney Industries reported the following results for 2020. Sales Variable costs Controllable fixed costs Average operating assets $516,000 309,600 69,060 654,000 Management is considering the following independent courses of action in 2021 in order to maximize the return on investment for this division 1. Reduce average operating assets by $104,640, with no change in controllable margin. 2. Increase sales $112,815, with no change in the contribution margin percentage. Your answer is partially...
2. Point, Inc. produces men's shirts. The following budgeted and actual amounts are for 2018: Cost Direct materials Direct labor Fixed overhead Budgeted Amounts at 2.500 units Actual Amounts at 2.900 units $55,000 $65,000 $80,000 $83,000 $30,000 $34,500 Prepare a responsibility report for Point, Inc. for the year. POINT, INC. Manufacturing Performance Responsibility Report For the Year Ended December 31, 2018 Budget (2,900 units) Differences Direct Materials Direct Labor Fixed Overhead Total costs Actual $65,000 $83,000 $34,500 3. The service...
- Your answer is partially correct. The South Division of Wiig Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets $2,955,000 1,973,940 602,200 5,041,000 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. 1 Increase sales...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales $34,670,000 $31,320,000 Operating income 2,773,600 1,252,800 Operating assets, January 1 6,394,000 5,600,000 Operating assets, December 31 7,474,000 6,000,000 Required: 1. For the Small Appliances Division, calculate: a. Average operating assets $ 6,934,000 b. Margin c. Turnover d. Return on investm nent (ROI) 2. For the Cleaning Products Division, calculate:...
31) Which of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same? A) A reduction in expenses. B) An increase in net operating income. C) An increase in operating assets. D) An increase in sales. 32) Tennill Inc. has a $1,400,000 investment opportunity with the following characteristics: Sales $ 4,480,000 40 % of sales Contribution margin ratio Fixed expenses S 1,657,600 The ROI for this year's investment opportunity is closest...
Problem 11-15 Return on Investment (ROI) and Residual Income
[LO11-1, LO11-2]
Problem 11-15 Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] Ending Balance Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance sheet Beginning Balance Assets Cash $ 125,000 Accounts receivable 339,000 Inventory 570,000 Plant and equipment, net 826,000 Investment in Buisson, S.A. 398,000 Land (undeveloped) 250,000 Total assets $ 2,508,000 Liabilities and stockholders' Equity Accounts payable $ 371,000 Long-term debt 976,000...
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