Check my work M10-8 (Algo) Calculating Return on Investment, Residual Income [LO 10-4, 10-5) Myrtle Company has sales of $205,000, cost of goods sold of $83,620, operating expenses of $20.900, average invested assets of $640,000, and a hurdle rate of 775 percent. points eBook Calculate Myrtle's return on investment and its residual income. (Enter your ROI answer as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Residual Income (Loss) answer to the nearest whole dollar.) Print References Return on Investment (ROI) Residual Income (Loss) Check my work M10-12 (Algo) Identifying Minimum, Maximum Transfer Prices [LO 10-6] points Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.43 per unit; full cost is $1.98. The component sells on the open market for $4.90 eBook Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it? (Enter your answers in 2 decimal places.) Print References Lowest price Division East will accept Highest price Division West will pay Ch10 Required Assignment Saved Help Save & Exit Submit Check my work M10-13 (Algo) Calculating Cost-Plus Transfer Price [LO 10-6] 1:w points Medlock Company has two divisions, Wheel and Chassis. The Wheel Division manufactures a wheel assembly that the Chassis Division uses. The variable cost to produce this assembly is $6.00 per unit; full cost is $7.00. The component sells on the open market for $13.00. eBook What will the transfer price be if Medlock uses a pricing rule of variable cost plus 50 percent? (Round your answer to 2 decimal places.) Print References Transfer price Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division: Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets Fruit Division Flower Division 900,000 $ 1,350,000 675,000 1,012,500 225,000 $ 337,500 2,250,000 $ 1,875,000 Orange has established a hurdle rate of 6 percent. Required: 1-a. Compute each division's return on investment (ROI) and residual income for last year. 1-b. Determine which manager seems to be performing better. 2. Suppose Orange is investing in new technology that will increase each division's operating income by $128,000. The total investment required is $1,900,000, which will be split evenly between the two divisions. Calculate the ROI and residual income for each division after the investment is made. 3. Determine whether both managers will support the investment E10-19 (Algo) Determining Minimum, Maximum, Negotiated Transfer Prices [LO 10-6] Shaw is a lumber company that also manufactures custom cabinetry. It is made up of two divisions: Lumber and Cabinetry. The Lumber Division is responsible for harvesting and preparing lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The lumber produced by the Lumber Division has a variable cost of $2.70 per linear foot and full cost of $3.70. Comparable quality wood sells on the open market for $8.10 per linear foot. Required: 1. Assume you are the manager of the Cabinetry Division. Determine the maximum amount you would pay for lumber. 2. Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have excess capacity. Repeat assuming you have no excess capacity. 3. Assume you are the president of Shaw. Determine a mutually beneficial transfer price assuming there is excess capacity. Complete this question by entering your answers in the tabs below
