Question 4 (12 marks)

The following information relates to the beverage division of Namibia Wholesalers.

N$

Sales revenue 6 870 000

Uncontrollable fixed costs traceable to the division 2 040 000

Allocated corporate overhead 885 000

Controllable fixed costs traceable to the division 1 680 000

Motor vehicles 1 500 000

Buildings 900 000

Fixtures and fitting 2 225 000

Trade payables (600 000)

Trade receivables 750 000

The variable costs take up to 35% of sales.

REQUIRED:

6.1. Compute the following for the Beverage Division:

6.1.1 Segment contribution margin; [2]

6.1.2 Controllable profit margin; [2]

6.1.3 Segment profit margin. [2]

6.2. Calculate the Beverage Division's return on investment that should be used to measure the management of the division's performance [6]

TOTAL MARKS 12