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Regarding the company's total operating assets of $900,000, the following facts exist: Assets directly used by and identified with the segment Los Angeles San
Regarding the company's total operating assets of $900,000, the following facts exist: Assets directly used by and identified with the segment Los Angeles San Francisco Segment Segment Contribution to indirect expenses $ 180,000 a. Prepare a statement showing the contribution margin of each segment, the contribution to indirect expenses of each segment, and the total income of Golden State Company. Assets directly used and identified with the segment $360,000 b. Determine the return on investment for evaluating (1) the earning power of the entire company and (2) the performance of each segment. c. Comment on the results of part (b). Problem F Shaq Company operates with three segments, Louisiana, Orlando, and LA. Data regarding these segments follow: Louisiana Orlando LA segment segment segment $ 324,000 $180,000 $144,000 1,800,000 1,440,000 720,000 a. Calculate the return on investment for each segment. Rank them from highest to lowest. b. Assume the cost of capital is 12% for a segment. Calculate residual income for each segment. Rank them from highest to lowest. c. Repeat (b), but assume the cost of capital is 17% for a segment. Rank them from highest to lowest. d. Comment on the rankings achieved.
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