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For many years, Miner Industries has manufactured prefabricated garden sheds where the sheds are constructed in sections to be assembled on customers property. The company
For many years, Miner Industries has manufactured prefabricated garden sheds where the sheds are constructed in sections to be assembled on customers property. The company expanded into the prefabricated shed market when it acquired VShed Company. VShed precuts various types of lumber into the appropriate lengths, packages them, and ships the product to customers for assembly. Miner decided to maintain VSheds separate identity and, thus, established the VShed Division as an investment center of Miner. Miner uses return on average investment ROI as a performance measure, with the investment defined as operating assets employed. All investments in operating assets are expected to earn a minimum return of before income taxes. VSheds ROI has ranged from to since it was acquired. VSheds operating statement for the year just ended is presented below. The divisions operating assets employed were $ at the end of the year, a increase over the balance at the end of the previous year. VShed Division Operating Statement For the Year Ended December $ omitted Sales revenue $ Cost of goods sold Gross profit Operating expenses Administrative $ Selling Income from operations before income taxes $ Calculate the following performance measures for the year just ended for the VShed Division of Miner Industries: a Return on average investment in operating assets employed ROI Round percent to one decimal place. Answer b Residual income calculated on the basis of average operating assets employed. Round amount to the nearest dollar. $Answer
For many years, Miner Industries has manufactured prefabricated garden sheds where the sheds are constructed in sections to be assembled on customers property. The company expanded into the prefabricated shed market when it acquired VShed Company. VShed precuts various types of lumber into the appropriate lengths, packages them, and ships the product to customers for assembly. Miner decided to maintain VSheds separate identity and, thus, established the VShed Division as an investment center of Miner.
Miner uses return on average investment ROI as a performance measure, with the investment defined as operating assets employed. All investments in operating assets are expected to earn a minimum return of before income taxes. VSheds ROI has ranged from to since it was acquired.
VSheds operating statement for the year just ended is presented below. The divisions operating assets employed were $ at the end of the year, a increase over the balance at the end of the previous year.
VShed Division Operating Statement
For the Year Ended December
$ omitted
Sales revenue $
Cost of goods sold
Gross profit
Operating expenses
Administrative $
Selling
Income from operations before income taxes $
Calculate the following performance measures for the year just ended for the VShed Division of
Miner Industries:
a Return on average investment in operating assets employed ROI
Round percent to one decimal place.
Answer
b Residual income calculated on the basis of average operating assets employed.
Round amount to the nearest dollar.
$Answer
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