Question
GH Inc. has two divisions: A and B. During the year just ended, Division A had a segment margin of $60,000 and variable costs equal
GH Inc. has two divisions: A and B. During the year just ended, Division A had a segment margin of $60,000 and variable costs equal to 75% of sales. Traceable fixed costs for Division B were $60,000. GH Inc as a whole had a contribution margin of 30%, a segment margin of $75,000, Common costs of $10,000 and sales of $500,000. GH Inc. has the following assets: Cash $100,000 A/R 50,000 Inventory 10,000 Land 500,000 Land held as an investment 120,000 Buildings 70,000 Equipment 30,000 GH Inc. uses a capital charge of 12%. 1) Given this data, prepare segmented income statements showing the Total as well as amounts for Division A and B. 2) Calculate the ROI, asset turnover, margin and residual income for GH Inc.
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