Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

attached is the word document about the questions that I have to turn in for today for managerial accounting, please help! Rate of Return on

attached is the word document about the questions that I have to turn in for today for managerial accounting, please help!

image text in transcribed Rate of Return on Investment The income from operations and the amount of invested assets in each division of Magentic Zero Industries are as follows: Income from Operations Retail Division Invested Assets $343,200 $1,320,000 Commercial Division 320,000 1,600,000 Internet Division 176,000 800,000 a. Compute the rate of return on investment for each division. Division Percent % Retail Division % Commercial Division % Internet Division 1. b. Which division is the most profitable per dollar invested? Residual Income The income from operations and the amount of invested assets in each division of Magentic Zero Industries are as follows: Income from Operations Retail Division Invested Assets $343,200 $1,320,000 Commercial Division 320,000 1,600,000 Internet Division 176,000 800,000 Assume that management has established a 10% minimum acceptable rate of return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division $343,200 $320,000 $176,000 Income from operations Minimum amount of income from operations Residual income $ b. Which division has the most residual income? $ $ Profit Margin, Investment Turnover, and Rate of Return on Investment The condensed income statement for the Consumer Products Division of Bantastic Industries Inc. is as follows (assuming no service department charges): Sales Cost of goods sold Gross profit Administrative expenses Income from operations $16,000,000 11,660,000 $ 4,340,000 2,100,000 $ 2,240,000 The manager of the Consumer Products Division is considering ways to increase the rate of return on investment. a. Using the DuPont formula for rate of return on investment, determine the profit margin, investment turnover, and rate of return on investment of the Consumer Products Division, assuming that $8,000,000 of assets have been invested in the Consumer Products Division. If required, round the investment turnover to one decimal place. Profit margin % Investment turnover Rate of return on investment % b. If expenses could be reduced by $320,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and rate of return on investment for the Consumer Products Division? If required, round the investment turnover to one decimal places. Profit margin % Investment turnover Rate of return on investment % Decision on Transfer Pricing Materials used by the Instrument Division of XPort Industries are currently purchased from outside suppliers at a cost of $210 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $160 per unit. Assume that a transfer price of $190 has been established and that 60,000 units of materials are transferred, with no reduction in the Components Division's current sales. a. How much would XPort Industries' total income from operations increase? $ b. How much would the Instrument Division's income from operations increase? $ c. How much would the Components Division's income from operations increase? $ d. Any transfer price will cause the total income of the company to , as long as the supplier division capacity is toward making materials for products that are ultimately sold to the outside

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Managerial Accounting Concepts

Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old

7th edition

978-0077632427, 77632427, 78025656, 978-0078025655

Students also viewed these Accounting questions