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Charlies Pajama Party currently operates two divisions. One division makes traditional pajamas while the other has invented a new line of child-proof pajamas mischievous children
Charlies Pajama Party currently operates two divisions. One division makes traditional pajamas while the other has invented a new line of child-proof pajamas mischievous children cannot take off alone. Their current information is as follows:
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Division 2 Division 1 $10,360 Net Income Total Assets $497,464 17% Sales Return on Investment Profit Margin Asset Turnover Required Return Residual Income 14% 2 Times 3 Times 9% H $5,486 ROUND ALL CALCULATIONS TO THE NEAREST HUNDREDTH (two decimal places). 1. Caculate A. 2. Calculate B. 3. Calculate C. [% 4. Calculate D. 5. Calculate E. DDDDDDD 6. Calculate F. 7. Calculate G. 8. Calculate H. 1% 9. Currently, the firm compensates their managers based on growth in ROI. The firm would like to see their ROI grow to 18%. They are currently evaluating a project which would bring in an income of $38,000 and would require assets of $200,000. Would either manager accept this project under their current compensation scheme? O A. Yes, only the division 1 manager would accept. O B. Yes, both managers would accept. O C. No, neither manager would accept. O D. Yes, only the division 2 manager would accept. 10. How could the manager alter the compensation contract to ensure the managers will make a decision consistent with the firm's desire to increase firm ROA to at least 18%? O A. Make compensation contracts based on Divisional Income. O B. Make compensation contracts based on firm ROA. O c. Make compensation contracts based on Residual Income. OD. Make compensation contracts based on Divisional ROA. 11. What does the 17% ROI of division 1 mean in words? O A. The firm earns .17 cents in income for every dollar of sales. OB. The firm earns 17 cents in income for every dollar of assets. O C. The firm earns 17 cents in income every time their assets turnover. O D. The firms generates 17 cents in sales for every dollar of assets. 12. What does the $5,486 Resdiual Income of division 2 mean in words? O A. The firm generates $5,486 in sales above their expected sales. O B. The firm generates $5,486 in sales above their required return on assets. O C. The firm has assets of $5,486 greater than expected assets. OD. The firm earns $5,486 in income above the required return on their assetsStep by Step Solution
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