Homework: Chapter 23 Homework (Required) Save Score: 0 of 1 pt 5 of 6 (0 complete) HW Score: 0%, 0 of 6 pts P23-33 (similar to) Question Help O Natural Bounty Corporation operates three divisions that process and bottle natural fruit juices. The historical-cost accounting system reports the following information for 2017: E: (Click the icon to view the information.) B Click the icon to see the useful life of the plants and the index of construction costs.) Given the high turnover of current assets, management believes that the historical-cost and current-cost measures of current assets are approximately the same. Read the requirements. Requirement 1. Compute the ROI ratio (operating income to total assets) of each division using historical-cost measures. (Enter the ROI as a percentage rounded to two decimal places, i.e. XX.XX%) Operating income / Total assets ) = ROI ( ( Passion Fruit Division Kiwi Fruit Division / % Mango Fruit Division = % Enter any number in the edit fields and then click Check Answer. ? parts remaining Clear All Check Answer Homework: Chapter 23 Homework (Required) Save Score: 0 of 1 pt 5 of 6 (0 complete) HW Score: 0%, 0 of 6 pts P23-33 (similar to) Question Help Requirements Natural Bounty Corporation operates three divisions that process and bottle natural frui (Click the icon to view the information.) B. (Click the icon to see the useful life of Given the high turnover of current assets, management believes that the historical-cost Read the requirements. Requirement 1. Compute the ROI ratio (operating income to total assets) of each divis aces, i.e. XX.XX%) Operating income Total assets 1. Compute the ROI ratio (operating income to total assets) of each division using historical-cost measures. Comment on the results. 2. Use the approach outlined to compute the ROI of each division, incorporating current-cost estimates as of 2017 for depreciation expense and long-term assets. Comment on the results. 3. What advantages might arise from using current-cost asset measures as compared with historical-cost measures for evaluating the performance of the managers of the three divisions? Data Table Passion Fruit Print Done Kiwi Fruit Division Mango Fru Division Division Revenues 1,250,000 $ 1,500,000 $ 3,100,000 Construction index Operating costs (excluding plant depreciation) 575,000 230,000 710,000 225,000 1,700,000 210,000 Plant depreciation $ 445,000 $ 565,000 $ 1,190,000 Natural Bounty estimates the useful life of each plant to be 12 years, with no terminal disposal value. The straight-line depreciation method is used. At the end of 2017, passion fruit plant is 10 years old, the kiwi fruit plant is 3 years old, and the mango fruit plant is 1 year old. An index of construction costs over the 10-year period that Natural Bounty has been operating (2007 year-end = 100) is as follows: Operating income Curent assets $ 450,000 $ 580,000 $ 2,025,000 650,000 2,310,000 Long-term assets-plant 460,000 2007 2014 2016 2017 $ 910,000 $ 2,605,000 $ 2,960,000 Total assets 100 145 180 190 Print Done Print Done ? parts remaining Clear All Check
