The Western Division of Claremont Company had net operating income of $154,000 and average invested assets of $560,000. Claremont has a required rate of return of 15.00 percent. Western has an opportunity to increase operating income by $52,000 with a $86,000 investment in assets. Compute Western Division's return on investment and residual income currently and if it undertakes the project. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Residual Income (Loss) answers to the nearest whole dollar. Return on Investment (ROI) Residual Income (Loss) Current Proposed Project % %

The Western Division of Claremont Company had net operating income of $154,000 and average invested assets of $560,000. Claremont has a required rate of return of 15.00 percent. Western has an opportunity to increase operating income by $52,000 with a $86,000 investment in assets. Compute Western Division's return on investment and residual income currently and if it undertakes the project. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Residual Income (Loss) answers to the nearest whole dollar. Return on Investment (ROI) Residual Income (Loss) Current Proposed Project % %

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 27E: Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the...

See similar textbooks

Similar questions

Myrtle Company has sales of $128,000, cost of goods sold of $58,000, operating expenses of $12,000, average invested assets of $400,000, and a hurdle rate of 7.75 percent. Calculate Myrtle's return on investment and its residual income. Note: Enter your ROI answer as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Residual Income (Loss) answer to the nearest whole dollar. Return on Investment (ROI) Residual Income (Loss) %
Golden Goodness (GG) has an investment center that had the following data: Operating Income $28,000 Sales $350,000 Invested assets $175,000 PMB has set a minimum acceptable rate of return at 14%. Using the information, answer the following questions. You must include what type of number it is (%, $, etc.) Part A: What is the residual income? Part B: Show calcualtions on how you got answer
Using the following data, estimate the new Return on Investment if there is a 11% decrease in the average operating assets - with the new average operating assets as the base. Sales $2,565,862 Contribution margin 48% Controllable fixed costs 293,294 Average operating assets $4,671,197 Round to two decimal places. Be sure to enter the answer as a percentage but do not include the % sign.
Using the following data, estimate the new Return on Investment if there is a 7% increase in sales - with average operating assets as the base. Sales $2,354,696 Contribution margin 44% Controllable 339,947 fixed costs Average operating $5,230,380 assets Round to two decimal places. Be sure to enter the answer as a percentage but do not include the % sign.
Augusta Corporation's Golf Division has sales of $201,000, cost of goods sold of $111,000, operating expenses of $36,000, average invested assets of $911,000, and a hurdle rate of 15.00 percent. Calculate the Golf Division's return on investment and its residual income. Note: Enter loss amount with a minus sign. Enter your ROI answer as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Residual Income (Loss) answer to the nearest whole dollar. Return on Investment (ROI) % Residual Income (Loss)
Profit Margin, Investment Turnover, and ROI Briggs Company has operating income of $13,824, invested assets of $96,000, and sales of $230,400. Use the DuPont formula to compute the return on investment. If required, round your answers to two decimal places. a. Profit margin ? b. Investment turnover ? c. Return on investment ?
Solano Company has sales of $520,000, cost of goods sold of $380,000, other operating expenses of $51,000, average invested assets of $1,650,000, and a hurdle rate of 8 percent.Required:1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Loss amounts should be indicated with a minus sign. Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.) Return on Investment 5.39% correct Investment Turnover 31.5151 incorrect Profit margin 17.11 correct Residual income 43,000 incorrect What is investment turnover and residual income? I did 520,000 / 1,650,000= .315151 RI 89,000- (1,650,000 * 8%)= 43,000 Thank you!
Capital Investments has two divisions. Each division's required rate of return is 10%. Planned operating results for 2020 are as follows: (Click the icon to view the planned operating results.) Read the requirements. Requirement a. What is the current ROI for each division? Begin by selecting the formula to calculate ROI, then compute the ROI for each division. Measure of income + Measure of investment 12,350,000 95,000,000 10,640,000 56,000,000 Division A Division B Division A Division B Measure of income 12,350,000 10,640,000 Division A Division B Requirement b. What is the current residual income for each division? Begin by selecting the formula to calculate the residual income (RI), then compute the RI for each division. X Required rate of return Measure of investment 95,000,000 56,000,000 10 % 10 % $ ROI ... % % -( -( $ -($ ROI X 13 % 19 % = ) = ) = Requirement c. Capital is planning an expansion that will require each division to increase its investments by $25,000,000 and its…
sing the following data, estimate the new Return on Investment if there is a 6% increase in sales - with average operating assets as the base. Sales $2,640,795 Contribution margin 38% Controllable fixed costs 248,297 Average operating assets $4,486,486 Round to two decimal places. Be sure to enter the answer as a percentage but do not include the % sign. Using the following data, estimate the new Return on Investment if there is a 9% decrease in variable and fixed costs- with average operating assets as the base. Sales $3,023,201 Contribution margin 37% Controllable fixed costs 244,010 Average operating assets $5,136,160 Round to two decimal places. Be sure to enter the answer as a percentage but do not include the % sign.
The Bottlebrush Division has income from operations of $90,300, invested assets of $258,000, and sales of $903,000. Use the DuPont formula to compute the return on investment, and show (a) the profit margin, (b) the investment turnover, and (c) the return on investment. Round answers to one decimal place. a. Profit Margin % b. Investment Turnover c. Return on Investment %
The following info is provided for three operating divisions. The minimum accepted rate of return by the investor is 7%. Division M N P invested assets 14,000,000 86,000,000 840,000 Compute Return on Investment for: a. Division M type your answer... b. Division N type your answer... c. Division P type your answer... sales net income Compute Residual Income for: 25,000,000 112,000,000 1,750,000 d. Division M$ type your answer... e. Division N $ f. Division P$ type your answer... type your answer... 50,000,000 250,000,000 6,000,000 g. What division looks like the best division? type your answer...
Gabbe Industries is a division of a major corporation. Last year the division had total sales of $27,311,900, net operating income of $2,840,438, and average operating assets of $7,094,000. The company's minimum required rate of return is 15%. Required: a. What is the division's margin? (Round your percentage answer to 2 decimal places.) b. What is the division's turnover? (Round your answer to 2 decimal places.) c. What is the division's return on investment (ROI)? (Round percentage your answer to 2 decimal places.)