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.

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.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter11: Performance Evaluation And Decentralization

Section: Chapter Questions

Problem 32E: Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions:...

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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?
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 >
Required information [The following information applies to the questions displayed below.] The following information is provided for each Investment Center. Investment Center Cameras Phones Computers Assume a target income of 14% of average assets. Compute residual income for each center. Note: Enter losses with a minus sign. Income Less: Target income Residual income (loss) Income $ 5,350,000 2,282,000 950,000 $ Cameras 5,350,000 $ Average Assets $28,100,000 16,300,000 16,400,000 Phones 2,282,000 $ Computers 950,000
The following information is provided for each Investment Center. Investment Center Income Average Assets Cameras Phones Computers $ 6,300,000 2,613,000 1,150,000 $ 23,000,000 20,100,000 14,600,000 QS 22-13 (Algo) Computing residual income LO A1 Assume a target income of 13% of average assets. Compute residual income for each center. Note: Enter losses with a minus sign. Residual income (loss) Cameras Phones Computers
Required Information [The following Information applies to the questions displayed below.] Megamart provides the following Information on its two Investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should the new Investment opportunity be accepted? The target return is 12%. Complete this question by entering your answers in the tabs below. Numerator: Required 1 Required 2 Required 3 Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income $ 3,173,000…
Based on the data in problem 24- 4 above, assume that management has established a 10%minimum acceptable rate of return for invested assets. a. Determine the residual income for each division.b. Which division has the most residual income?
! Required information [The following information applies to the questions displayed below.] The following information is provided for each Investment Center. Investment Center Cameras Phones Computers Income $ 6,000,000 2,295,000 1,050,000 Assume a target income of 15% of average assets. Compute residual income for each center. Note: Enter losses with a minus sign. Residual income (loss) Cameras Average Assets $ 26,900,000 15,300,000 13,600,000 Phones Computers
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Determining missing items in return and residual income computations Data are presented in the following table of returns on investment and residual incomes: Invested Assets Operating Income Return on Investment Minimum Return on Investment Minimum Acceptable Operating Income Residual Income $1,200,000 $198,000 (a)   12% (b)     (c)    $800,000 (d) (e)   (f)   $120,000 $40,000 $750,000 (g) 14% (h)   $90,000 (i)    $1,800,000 $441,000 (j)   15% (k)     (l)    Determine the missing items, identifying each item by the appropriate letter. Round your percentages to one decimal place. a. fill in the blank 1 % b. $fill in the blank 2 c. $fill in the blank 3 d. $fill in the blank 4 e. fill in the blank 5 % f. fill in the blank 6 % g. $fill in the blank 7 h. fill in the blank 8 % i. $fill in the blank 9 j. fill in the blank 10 % k. $fill in the blank 11 l. $fill in the…
Determining missing items in return and residual income computations Data are presented in the following table of returns on investment and residual incomes: Invested Assets Operating Income Return on Investment Minimum Return on Investment Minimum Acceptable Operating Income Residual Income $1,200,000 $198,000 (a)   12% (b)     (c)    $800,000 (d) (e)   (f)   $120,000 $40,000 $750,000 (g) 14% (h)   $90,000 (i)    $1,800,000 $441,000 (j)   15% (k)     (l)    Determine the missing items, identifying each item by the appropriate letter. Round your percentages to one decimal place. a. % b. $ c. $ d. $ e. % f. % g. $ h. % i. $ j. % k. $ l. $
Determining missing items in return and residual income computations Data are presented in the following table of returns on investment and residual incomes: Invested Assets Operating Income Return on Investment Minimum Return on Investment Minimum Acceptable Operating Income Residual Income $870,000 $200,100 (a)   13% (b)     (c)    $520,000   (d) (e)   (f)   $57,200 $26,000 $340,000   (g) 14% (h)   $37,400 (i)    $260,000 $49,400 (j)   11% (k)     (l)