1. Exhibit 11-4 The following information is for two divisions at Wiley Company.

	Couch Division	Chair Division
Sales	?	$6,000,000
Operating income	?	$ 560,000
Operating profit margin	11.0%	?
Average operating assets	$1,250,000	$ 4,000,000
Asset turnover	2.0	?
ROI	?	?

Refer to Exhibit 11-4. What is the ROI for the Couch Division (rounded to the nearest tenth of a percent)?

a- 5.5%

b- 22.0%

c- None of the answer choices is correct.

d- 9.0%

e- 12.5%

2. Exhibit 11-2 Manford Inc. has two divisions Refrigerators and Dish Washer.

Manford Company
Segmented Income Statements
For the Current Fiscal Year Ended December 31
	Refrigerator	Dish Washer
	Division	Division
Sales	$10,000,000	$5,400,000
Cost of goods sold	4,200,000	2,660,000
Gross margin	5,800,000	2,740,000
Allocated overhead (from corporate)	940,000	740,000
Selling and administrative expenses	780,000	360,000
Operating income	4,080,000	1,640,000
Income tax expense (45%)	1,836,000	738,000
Net income	$ 2,244,000	$ 902,000

Refer to Exhibit 11-2. Assume the Dish Washer Division has average operating assets totaling $6,560,000 for the year and the company's cost of capital rate is 15 percent. What is the residual income for the Dish Washer division?

a- $246,000

b- $656,000

c- $2,084,000

d- $4,744,000

e- None of the answer choices is correct.

3. Exhibit 11-1 Ashville Company has two divisions Bikes and Trikes.

Ashville Company
Segmented Income Statements
For the Current Fiscal Year Ended December 31
	Bikes Division	Trikes Division
Sales	$2,400,000	$1,000,000
Cost of goods sold	1,400,000	530,000
Gross margin	1,000,000	470,000
Allocated overhead (from corporate)	270,000	170,000
Selling and administrative expenses	190,000	140,000
Operating income	540,000	160,000
Income tax expense (40%)	216,000	64,000
Net income	$ 324,000	$ 96,000

Refer to Exhibit 11-1. Using the segmented income statements, what is the profit margin ratio for the Bikes Division (to the nearest tenth of a percent)?

a- None of the answer choices is correct.

b- 41.7%

c- 58.3%

d- 13.5

e- 22.5%

4. Exhibit 11-2 Manford Inc. has two divisions Refrigerators and Dish Washer.

Manford Company
Segmented Income Statements
For the Current Fiscal Year Ended December 31
	Refrigerator	Dish Washer
	Division	Division
Sales	$10,000,000	$5,400,000
Cost of goods sold	4,200,000	2,660,000
Gross margin	5,800,000	2,740,000
Allocated overhead (from corporate)	940,000	740,000
Selling and administrative expenses	780,000	360,000
Operating income	4,080,000	1,640,000
Income tax expense (45%)	1,836,000	738,000
Net income	$ 2,244,000	$ 902,000

Refer to Exhibit 11-2. Assume the Refrigerator Division has average operating assets totaling $24,000,000 for the year. What is the division's return on investment (to the nearest hundredth of a percent)?

a- 24.17%

b- 40.80%

c- 58.00%

d- None of the answer choices is correct.

e- 17.00%

5. Cambridge Products manufactures and sells cat toys and cat beds. The Bed Division incurs the following costs for the production of a single cat bed when 5,000 beds are produced each year.

Direct materials	$8.00
Direct labor	5.50
Variable overhead	2.50
Fixed overhead	2.00
Total cost	$18.00

The company sells cat beds to various pet stores for $26.00. The Toy Division is doing a promotion whereby each customer that purchases ten cat toys during the months of January, February, and March will receive a free cat bed. The Toy Division would like to purchase these beds from the Bed Division. Assuming the Bed Division is at full capacity, what is the optimal transfer price?

a- $ 26.00

b- $13.50

c- None of the answer choices is correct.

d- $18.00

e- $16.00

6. Exhibit 11-4 The following information is for two divisions at Wiley Company.

	Couch Division	Chair Division
Sales	?	$6,000,000
Operating income	?	$ 560,000
Operating profit margin	11.0%	?
Average operating assets	$1,250,000	$ 4,000,000
Asset turnover	2.0	?
ROI	?	?

Refer to Exhibit 11-4. What is the asset turnover for the Chair Division (rounded to the nearest tenth)?

a- None of the answer choices is correct.

b- 1.5

c- 0.7

d- 0.1

e- 7.1