Adams Corporation evaluates divisional managers based on ROI. Operating results for the company's Northern Division for...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Adams Corporation evaluates divisional managers based on ROI. Operating results for the company's Northern Division for last year are given below: Sales $27,000,000 16,200,000 Variable expenses 10,800,000 Contribution margin Fixed expenses 8,805,000 Net operating income $1,995,000 Divisional operating assets The Northern Division has an opportunity to add a new product line as follows: Required investment Net operating income Adams Corporation's minimum acceptable rate of return Required: Compute the following: Northern Division ROI for last year Northern Division ROI if new product line is added Determine whether the Northern Division manager will ACCEPT or REJECT the new product line based on ROI. Northern Division residual income for last year Northern Division residual income if the new product line is added $9,500,000 Determine whether the Northern Division manager will ACCEPT or REJECT the new product line based on residual income. $2,500,000 $400,000 15% ACCEPT Adams Corporation evaluates divisional managers based on ROI. Operating results for the company's Northern Division for last year are given below: Sales $27,000,000 16,200,000 Variable expenses 10,800,000 Contribution margin Fixed expenses 8,805,000 Net operating income $1,995,000 Divisional operating assets The Northern Division has an opportunity to add a new product line as follows: Required investment Net operating income Adams Corporation's minimum acceptable rate of return Required: Compute the following: Northern Division ROI for last year Northern Division ROI if new product line is added Determine whether the Northern Division manager will ACCEPT or REJECT the new product line based on ROI. Northern Division residual income for last year Northern Division residual income if the new product line is added $9,500,000 Determine whether the Northern Division manager will ACCEPT or REJECT the new product line based on residual income. $2,500,000 $400,000 15% ACCEPT
Expert Answer:
Answer rating: 100% (QA)
Answer 1 Northern division ROI for last year net operating income operating assets 19950009500000 21 ... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
I know headquarters wants us to add that new product line, said Dell Havasi, manager of Billings Companys Office Products Division. But I want to see the numbers before I make any move. Our divisions...
-
"I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division. "But I want to see the numbers before I make any move. Our...
-
I know headquarters wants us to add that new product line, said Dell Havasi, manager of Billings Companys Office Products Division. But I want to see the numbers before I make any move. Our divisions...
-
You have this information r*=2.5%, inflation premium =3%, default risk premium=3.5%, liquidity premium =2% and maturity risk premium =1.5%.What is the treasury bill rate?
-
A circuit consisting of a capacitor and an active resistance R= 110 connected in series is fed an alternating voltage with amplitude Vm = 110V. In this case the amplitude of steady-state current is...
-
A robot has just been installed at a cost of $81,000. It will have no salvage value at the end of its useful life. Given the following estimates and probabilities for the yearly savings and useful...
-
Some investment professionals refer to LIFO inventory valuation as an earnings management tool, suggesting that LIFO allows a company to create a hidden earnings reserve on a companys balance sheet,...
-
The manager of the Radford Credit Union (RCU) wants to determine how many part-time tellers to employ to cover the peak demand time in its lobby from 11:00 am to 2:00 pm. RCU currently has three...
-
Fey Fashions expects the following dividend pattern over the next seven years: LOADING.... The company will then have a constant dividend of $ 2 . 9 0 forever. What is the stock's price today if an...
-
I See The Light Projected Income Statement For the Period Ending December 31, 20x1 $ 1,125,000.00 25,000 lamps @ $45.00 @ $30.00 Sales Cost of Goods Sold 750.000.00 Gross Profit $ 375.000.00 Selling...
-
Gordon Growth company has identified the two mutually projects. Both project A and B have initial cash outlay of $37,500 and both projects have four years lives. Cash inflows from project A and B...
-
Under what circumstances should a party be joined in an action?
-
Why should an entrepreneur monitor inventory turnover? What might a low turnover indicate? A high turnover?
-
Why is it necessary to name the real party in interest in a lawsuit?
-
What would be the potential risk of not directly linking the marketing plan and the financial forecast?
-
How do you plan to accomplish the accounting for your business? What steps will you take to make sure your accountant understands your business and you understand your financial statements?
-
Using Excel and WorldCom's income statement and balance sheet for 2001, provided on pages F-2 and F-3 of Form 10-K, prepare a common-size balance sheet and income statement for the years 2000 and...
-
Rewrite the code of Figure 7.3 in Ada, Java, or C#. Figure 7.3: template class queue { item items [max_items]; int next_free, next_full, num_items; public: queue () : next_free (0), next_full(0),...
-
What is the meaning of contribution margin ratio? How is this ratio useful in planning business operations?
-
Currington Company wants to use absorption cost-plus pricing to set the selling price on a newly remodeled product. The company plans to invest $150,000 in operating assets to produce and sell 12,000...
-
The Excel worksheet form that appears below is to be used to recreate the Review Problem pertaining to the Magnetic Imaging Division of Medical Diagnostics, Inc. Download the workbook containing this...
-
Use chloroform to extract acetone from water. Equilibrium data are given in Table 13-6. Find number of equilibrium stages required for a countercurrent cascade if feed is \(1000.0 \mathrm{~kg} /...
-
We are extracting pyridine from \(500 \mathrm{~kg} / \mathrm{h}\) of a feed that is \(15.0 \mathrm{wt} \%\) pyridine and \(85.0 \mathrm{wt} \%\) water using \(225 \mathrm{~kg} / \mathrm{h}\) of pure...
-
Equilibrium for extraction of acetic acid from 3-heptanol into water at \(25^{\circ} \mathrm{C}\) is \(\mathrm{y}=1.208 \mathrm{x}\), where \(\mathrm{y}=\) weight fraction acetic acid in water and...
Study smarter with the SolutionInn App