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QUESTION 6 Computer Company is headquartered in Hong Kong. It has two divisions, namely Apply Division and Orange Division. The Apple Division, a profit center
QUESTION 6 Computer Company is headquartered in Hong Kong. It has two divisions, namely Apply Division and Orange Division. The Apple Division, a profit center of Computer Company, reported the following data for the last quarter of 2021: Sales $9,000,000 Variable costs 6,300,000 Traceable fixed costs 1,200,000 Common fixed costs 830,000 Orange Division is an investment center and reported the following data for the last quarter of 2021. Sales $4,000,000 Variable costs 2,600,000 Traceable fixed costs 800,000 Average operating assets 5,000,000 Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the Orange Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. Increase sales by $400,000 with no change in the contribution margin percentage. 2. Reduce variable costs by $120,000. 3. Reduce average operating assets by 4% 1. a. Required: Prepare Income Statement of Apple Division, with Segment Margin for the last quarter of 2021. (4 marks) Compute the return on investment (ROI) of Orange Division for the last quarter of 2021. Evaluate the ROI under each of the proposed courses of action for Orange Division (4 marks) b
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