Question
Heritage Hockey Sticks is a Canadian company that aims to grow the game of hockey through the effort of making and supplying hockey sticks at
Heritage Hockey Sticks is a Canadian company that aims to grow the game of hockey through the effort of making and supplying hockey sticks at price points that are more affordable. The company has two main divisions: Wholesale (sold via retailers) and Teams (sold to teams and organizations directly). Each division's manager has the authority to make investments as needed and is evaluated based largely on ROI. The Wholesale division reported the following results for the fiscal 2020:
Sales
$425,000
Variable costs
306,000
Controllable fixed costs
103,000
Average operating assets
175,000
Instructions
(a) Assume that the manager of the Wholesale division is able to reduce the operating assets by $20,000 without any change in sales or operating income. Compute the base-line and the adjusted ROIs. What should the manager do?
(b) Consider the balanced scorecard. Explain what the purpose of the learning and growth perspective is. Provide an example.
(c) Explain what investment center is.
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