Can anyone help me to solve this question.
Notes Division A is relatively new and sales have grown 9% year over year for its fint three years and are forecasted to grow 7% and 6% over the next two years. Division B has been operating for the past 7 years: tt has two manutacturing plants that are running below capacity and executive management at Corporate Office have advised the General Manager of the Division to move all production to one plant as head office is going to sell the unneeded machinery and equipinent that is on the books at a value of $700,000. The statements above have segregated the costs to date of discontinuing the operations of the idle plant. Division C is the oldest division (over 30 years old) with mature products. its workforce is very stable and has very fittie turnover in persemet. Head office cakculations show that it is earning 7.6% bascd on assets valued at $7.800.000. Diviaion D has been in existence for six vears and a much more volatile than the other divisiore, Sales have varied by as much as 15X year to vear. Thls past year, Question 1 (10 points) The income statement for Performance Limited is given beiow along with some supplementary information. Performance Limited income Stateinent for the year ended December 30.2020 fin operating divisions and allocates its cosis to the operating divisions The weighted average cost of capital is 10% and the Board of Directors at the Parent Company have discussed their goal to ensure all divisions that cannot earn tis 10% threshold should be shut down with resources devoted to division with greater returns and future growth. The Board and executive management have focused their attention amost entirely on the niche markets of Divisions A, B, and D over the past few ygar as they see this as the future of the firm. To motivate the general managers, the Bbard is proposing a bonus plan to reward divisions earning in excess of the 108 Weighted Average Cost of Capital. All divisions are budgeting the same gross margin percent for the next three years. Required: What are the key issues you see in terms of the current performance evaluation and plans to close divisions not earning the 10% cont of capital? Hint - look for about 5 issues that should be addressed - and write one or two short sentences on each it is not necessary to do a sipnificant number of calculations. Management is forecasting an average of 5% growth in sales up to 2017 . Corporate Otfice issued bonds to finance this division. The corporate office makes all capital investment and financing decisions for the operating divisions and allocates its costs to the operating divisions The weighted average cost of capital is 10N and the Board of Directoys at the Parent Compary have discussed their goal to ensure all divisions that cannot earn tis 10% threshoid should be shut down with resources devoted to division with greater returns and future growth. The Board and executive management have focused their attention aimost entirely on the niche markets of Divislons A, B, and D over the past few vear as they see this as the future of the firm. To motivate the general managers. the Board is proposine a bonus plan to reward divisions eaming in excess of the 10x Weighted Average Cost of Caplital. All divisions are budgeting the same gross margin percent for the next three years Required: What are the ker issues vou see in terms of the current performance evaluation and pians to close divisions not caming the 10% cost of capital? Notes Division A is relatively new and sales have grown 9/6 year over year for its first three years and are forecasted to grow 7% and 6% over the next two years. Division B has been operating for the past 7 years. it has two manufacturing plants that are running below capocity and executive managernent at Corporate Office have advised the General Manager of the Division to move all production to one plant as head office is going to sell the unneeded machinery and equipment that is on the books at a value of $700,000. The statements above have segregated the costs to date of discontinuing the operations of the idle plant. Divlsion C is the oldest divition fover 30 years old with mature products, its workforce is very stable and has very little tumover in pernonnel. Head office calculations show that it is earning 7.6X based on assets valued at $3.800,000 Division D has been in existence for six vears and is much more volatile than the other divisions. Sales have varied by as much as 15% year to year. This past vear. sales were up 10% from the prior year but down 5x from the vear before last. Management is forecasting an average of 5\% growth in sales up to 2017. Corporate Orfice issued bonds to finance this division. The corporate office makes all capital imvestment and financing decisions for the Notes Division A is relatively new and sales have grown 9% year over year for its first three years and are forecasted to grow 79W and 6% over the next two vears. The Board and executive management have focused their attention almost entirely on the niche markets of Divisions A, B, and D over the past few year as they see this as the future of the firm. To motivate the general managers, the Board is proposing a bonus plan to reward divisions earning in excess of the 10% Weighted Average Cost of Capital. All divisions are budgeting the same gross margin percent for the next three years. Required: What are the key issues you see in terms of the current performance cvaluation and Dlans to close divisions not eaming the 10x cost of caplati. Hint - look for about 5 lssues that should be addressed - and write one or two short sentences on each. It is not necessary to do a significant number of calculations. books at a value of $700,000. The statements above have segregated the costs to date of discontinuing the operations of the idle plant. Division C is the oldest division (over 30 vears old) with mature products, its workforce is very stable and has very little turnover in personnel. Head office calculations show that it is eaming 7,6% based on assets valued at $3,800,000. Division D has been in existence for six years and is muDh more volatille than the other divisions. Sales have varied by as much as 15% year to year. This past vear. sales were up 10% from the prior year but down 5% from the year before last. Management is forecasting an average of 5% growth in sales up to 2017 . Corporate Otfice issued bonds to finance this division. The corporate olfice makes all capital investment and financing decisions for the operating divisions and allocates its costs to the operating divisions The weighted average cost of capital is 10% and the Board of Directors at the Parent Company have discussed their goal to ensure all divisions that cannot earn tis 10x threshold should be shut down with resources devoted to division with greater returns and future growth. The Board and executive management have focused their attention almost entirely on the niche markets of Divisions A. B, and D over the past few year as they see this as the future of the firm. To motivate the general matiagen, the Board is proposing a Notes Division A is relatively new and sales have grown 9% year over year for its fint three years and are forecasted to grow 7% and 6% over the next two years. Division B has been operating for the past 7 years: tt has two manutacturing plants that are running below capacity and executive management at Corporate Office have advised the General Manager of the Division to move all production to one plant as head office is going to sell the unneeded machinery and equipinent that is on the books at a value of $700,000. The statements above have segregated the costs to date of discontinuing the operations of the idle plant. Division C is the oldest division (over 30 years old) with mature products. its workforce is very stable and has very fittie turnover in persemet. Head office cakculations show that it is earning 7.6% bascd on assets valued at $7.800.000. Diviaion D has been in existence for six vears and a much more volatile than the other divisiore, Sales have varied by as much as 15X year to vear. Thls past year, Question 1 (10 points) The income statement for Performance Limited is given beiow along with some supplementary information. Performance Limited income Stateinent for the year ended December 30.2020 fin operating divisions and allocates its cosis to the operating divisions The weighted average cost of capital is 10% and the Board of Directors at the Parent Company have discussed their goal to ensure all divisions that cannot earn tis 10% threshold should be shut down with resources devoted to division with greater returns and future growth. The Board and executive management have focused their attention amost entirely on the niche markets of Divisions A, B, and D over the past few ygar as they see this as the future of the firm. To motivate the general managers, the Bbard is proposing a bonus plan to reward divisions earning in excess of the 108 Weighted Average Cost of Capital. All divisions are budgeting the same gross margin percent for the next three years. Required: What are the key issues you see in terms of the current performance evaluation and plans to close divisions not earning the 10% cont of capital? Hint - look for about 5 issues that should be addressed - and write one or two short sentences on each it is not necessary to do a sipnificant number of calculations. Management is forecasting an average of 5% growth in sales up to 2017 . Corporate Otfice issued bonds to finance this division. The corporate office makes all capital investment and financing decisions for the operating divisions and allocates its costs to the operating divisions The weighted average cost of capital is 10N and the Board of Directoys at the Parent Compary have discussed their goal to ensure all divisions that cannot earn tis 10% threshoid should be shut down with resources devoted to division with greater returns and future growth. The Board and executive management have focused their attention aimost entirely on the niche markets of Divislons A, B, and D over the past few vear as they see this as the future of the firm. To motivate the general managers. the Board is proposine a bonus plan to reward divisions eaming in excess of the 10x Weighted Average Cost of Caplital. All divisions are budgeting the same gross margin percent for the next three years Required: What are the ker issues vou see in terms of the current performance evaluation and pians to close divisions not caming the 10% cost of capital? Notes Division A is relatively new and sales have grown 9/6 year over year for its first three years and are forecasted to grow 7% and 6% over the next two years. Division B has been operating for the past 7 years. it has two manufacturing plants that are running below capocity and executive managernent at Corporate Office have advised the General Manager of the Division to move all production to one plant as head office is going to sell the unneeded machinery and equipment that is on the books at a value of $700,000. The statements above have segregated the costs to date of discontinuing the operations of the idle plant. Divlsion C is the oldest divition fover 30 years old with mature products, its workforce is very stable and has very little tumover in pernonnel. Head office calculations show that it is earning 7.6X based on assets valued at $3.800,000 Division D has been in existence for six vears and is much more volatile than the other divisions. Sales have varied by as much as 15% year to year. This past vear. sales were up 10% from the prior year but down 5x from the vear before last. Management is forecasting an average of 5\% growth in sales up to 2017. Corporate Orfice issued bonds to finance this division. The corporate office makes all capital imvestment and financing decisions for the Notes Division A is relatively new and sales have grown 9% year over year for its first three years and are forecasted to grow 79W and 6% over the next two vears. The Board and executive management have focused their attention almost entirely on the niche markets of Divisions A, B, and D over the past few year as they see this as the future of the firm. To motivate the general managers, the Board is proposing a bonus plan to reward divisions earning in excess of the 10% Weighted Average Cost of Capital. All divisions are budgeting the same gross margin percent for the next three years. Required: What are the key issues you see in terms of the current performance cvaluation and Dlans to close divisions not eaming the 10x cost of caplati. Hint - look for about 5 lssues that should be addressed - and write one or two short sentences on each. It is not necessary to do a significant number of calculations. books at a value of $700,000. The statements above have segregated the costs to date of discontinuing the operations of the idle plant. Division C is the oldest division (over 30 vears old) with mature products, its workforce is very stable and has very little turnover in personnel. Head office calculations show that it is eaming 7,6% based on assets valued at $3,800,000. Division D has been in existence for six years and is muDh more volatille than the other divisions. Sales have varied by as much as 15% year to year. This past vear. sales were up 10% from the prior year but down 5% from the year before last. Management is forecasting an average of 5% growth in sales up to 2017 . Corporate Otfice issued bonds to finance this division. The corporate olfice makes all capital investment and financing decisions for the operating divisions and allocates its costs to the operating divisions The weighted average cost of capital is 10% and the Board of Directors at the Parent Company have discussed their goal to ensure all divisions that cannot earn tis 10x threshold should be shut down with resources devoted to division with greater returns and future growth. The Board and executive management have focused their attention almost entirely on the niche markets of Divisions A. B, and D over the past few year as they see this as the future of the firm. To motivate the general matiagen, the Board is proposing a
