Mocha Joe owns and operates coffoe shops in throe farge cities on the West Coast: Seattle, San Francsco, and Los Angeles The three gecgraphic areas are considered separate divisions. Each division owns tha buildings of the cotles shops, which are considarod long term assets. The buiding are af th yarn oid and have a total useful life of 20 years. Current assols are considered negligible in each divisiort. Division managers at Mocha Joe are evatuated on the basis of ROI, Which traditionaliy has been calculated as the revo of operating income divided by the not book valuo of assets, measured at historical costs The followimg information refers to the three divisions at the end af 20120 (Click the icon to view the data.) (1) (Cick the icon to view the arditional informstion) Read the reguiremonts Requirement 1. Explain how the numerator of the ROl measure, operating income, has to be adusted to reflect current costs and do the calculasian for tret three divisions. Select the appropriale fomula labels as a way of explaining how the mumerator of the Fol measure (coerating income) has to bet adjusted fo mficct armat Mocha Joe owns and operates coffee shops in three large cibes on the West Coast Seattle, San Francisco, and Los Argules . The three geographic areas are considered separate divisions. Each divasion owns the buildings of the cofleo shops, which aro considered longterm assets The buidings are ali 10 years Data table -sets, measured at historical costs. costs and do the cilculation for the a has to be adjuntod to reflect ciarent! Mocha Joe owns and operases colfee shops in three large cilies on the West Coast Seatlle, San Francisco, and Los Angeles Tha theo geographic arca9 More info Senior management at Mocha Joe wants to swich fo calculating ROI based on cument costs. Costs of nimw constructions have exploded all along the West Cost and would now be hwice as oxpersive as they wore 10 years ago, In other words, the construction cost index has doubled in al three ebes. (The useful ifn of 10 years ago, in other words, Mocha Joe owns and operates cottee shops in three large cities on the West Coast: Seatile, San Francisco, and Los Angeles. The three geogrnphic aroas are corsidered separate divisions. Each division owns the buildings of the coffoe shops, Which are considered long-term assets. The buildings are ali 10 years basf The Requirements Res 1. Explain how the numerator of the ROI maasure, opocating income, has to be adfusted to reflect current costs and do the calculation for the three divisions. 2. Explain how the denominalor of the ROl measure, not book value of assets, has to bo adjusted to reflect curren costs and do tho-calculations for the three divisions. 3. Calculate ROI based on curtent costs for the three divisions and compare to the ROI measures based on historical costs. k value of assets, measured at hstoricai costs in.) ng income) has to be adjusted fo refloct currerit divisions. Adjustud eperating Mocha Joe owns and operates coffoe shops in throe farge cities on the West Coast: Seattle, San Francsco, and Los Angeles The three gecgraphic areas are considered separate divisions. Each division owns tha buildings of the cotles shops, which are considarod long term assets. The buiding are af th yarn oid and have a total useful life of 20 years. Current assols are considered negligible in each divisiort. Division managers at Mocha Joe are evatuated on the basis of ROI, Which traditionaliy has been calculated as the revo of operating income divided by the not book valuo of assets, measured at historical costs The followimg information refers to the three divisions at the end af 20120 (Click the icon to view the data.) (1) (Cick the icon to view the arditional informstion) Read the reguiremonts Requirement 1. Explain how the numerator of the ROl measure, operating income, has to be adusted to reflect current costs and do the calculasian for tret three divisions. Select the appropriale fomula labels as a way of explaining how the mumerator of the Fol measure (coerating income) has to bet adjusted fo mficct armat Mocha Joe owns and operates coffee shops in three large cibes on the West Coast Seattle, San Francisco, and Los Argules . The three geographic areas are considered separate divisions. Each divasion owns the buildings of the cofleo shops, which aro considered longterm assets The buidings are ali 10 years Data table -sets, measured at historical costs. costs and do the cilculation for the a has to be adjuntod to reflect ciarent! Mocha Joe owns and operases colfee shops in three large cilies on the West Coast Seatlle, San Francisco, and Los Angeles Tha theo geographic arca9 More info Senior management at Mocha Joe wants to swich fo calculating ROI based on cument costs. Costs of nimw constructions have exploded all along the West Cost and would now be hwice as oxpersive as they wore 10 years ago, In other words, the construction cost index has doubled in al three ebes. (The useful ifn of 10 years ago, in other words, Mocha Joe owns and operates cottee shops in three large cities on the West Coast: Seatile, San Francisco, and Los Angeles. The three geogrnphic aroas are corsidered separate divisions. Each division owns the buildings of the coffoe shops, Which are considered long-term assets. The buildings are ali 10 years basf The Requirements Res 1. Explain how the numerator of the ROI maasure, opocating income, has to be adfusted to reflect current costs and do the calculation for the three divisions. 2. Explain how the denominalor of the ROl measure, not book value of assets, has to bo adjusted to reflect curren costs and do tho-calculations for the three divisions. 3. Calculate ROI based on curtent costs for the three divisions and compare to the ROI measures based on historical costs. k value of assets, measured at hstoricai costs in.) ng income) has to be adjusted fo refloct currerit divisions. Adjustud eperating
