Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 Tesla Trading Ltd has two (2) divisions, Photovoltaic Equipment and High-Tech Batteries. The following information is provided for both divisions: High-Tech Photovoltaic Batteries

image text in transcribed
Question 2 Tesla Trading Ltd has two (2) divisions, Photovoltaic Equipment and High-Tech Batteries. The following information is provided for both divisions: High-Tech Photovoltaic Batteries Equipment Sales (+) 45,000,000 30,000,000 Costs (+) 34,500,000 20,250,000 Current assets (A) 7.500.000 6,000,000 Non-current Assets (4) 22,500,000 9,000,000 Controllable costs are typically 75% of divisional costs, the balance of 25% being allocated overheads from the head office. The overall company cost of capital is 15%. Divisions are treated as investment centres. Required: a) Compute the following for the divisions and comment on your result: i. Absolute profit ii. Return on investment Residual income b) What are cost centres, profit centres and investment centres in divisionalized firms? (30 points)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting Chapters 1-26

Authors: Douglas J. McQuaig, Patricia A. Bille

6th Edition

0395796997, 978-0395796993

More Books

Students also viewed these Accounting questions

Question

6. What actions might make employers lose elections?

Answered: 1 week ago