Required information Exercise 11-12 (Algo) Effects of Changes in Profits and Assets on Return on Investment (ROI) [LO11-1] The following information applies to the questions displayed below.) Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on retum on investment (ROI). The company's Springfield Club reported the following results for the past year: The following questions are to be considered independently. Exercise 11-12 Part 2 (Algo) 2. Assume that the manager of the club is able to increase sales by $86,000 and that, as a result, net operating income increases by \$7,396. Further assume that this is possible without ary increase in average operating assets. What would be the club's return on investment (ROI)? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Required information Exercise 11-12 (Algo) Effects of Changes in Profits and Assets on Return on Investment (ROI) [LO11-1] [The following information applies to the questions displayed below] Fitness Fanatics is a regional chain of health clubs. The managess of the clubs, who have authority to make investments as needed, are evaluated based largely on return on investment (ROI). The companys Springfield Club reported the following results for the past year: The following questions are to be considered independently. Exercise 11-12 Part 3 (Algo) 3. Assume that the manager of the club is able to reduce expenses by $3.440 without any change in sales or average operating 15sets. What would be the club's return on investment (ROI)? (Do not round intermedlote calculations. Round your answer to 2 decimal places.) Required information Exercise 11-12 (Algo) Effects of Changes in Profits and Assets on Return on Investment (ROI) [LO11-1] [The following information applies to the questions displayed below.] Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on retum on investment. (ROI). The company's Springfield Club reported the following results for the past year: The following questions are to be consldered independently. Exercise 11-12 Part 4 (Algo) 4. Assume that the manager of the club is able to reduce average operating assets by $50,000 without any change in sales or net operating income. What would be the club's return on investment (ROI)? (Do not round intermediate colculations. Round your answer to 2 decimal ploces.) Required informotion Exercise 11-13 (Algo) Transfer Pricing Situations [LO11-3] [The following information applies to the questions displayed below.] In each of the cases below, assume Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits Exercise 11-13 (Algo) Part 1 Required: 1. Refer to the data in case A above. Assume in this case that $3 per unit in variable selling costs can be avolded on intracompany sales. a. What is the lowest acceptable transfer price from the perspective of the selling division? b. What is the highest acceptable transfer price from the perspective of the buying division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotiate and make decislons on their own, will a transfer probably take place? Required informotion Exercise 11-13 (Algo) Transfer Pricing Situations [LO11-3] [The following information applies to the questions displayed belowi] In each of the cases below, assume Division X has a product that can be sold elther to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits. Exercise 11-13 (Algo) Part 2 Required: 2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany sales. a. What is the lowest acceptable transfer price from the perspective of the selling division? b. What is the highest acceptable transfer price from the perspective of the buying division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotlate and make decisions on their own, will a transfer probably take place? "I know headquarters wants us to add that new product line," said Dell Havast, manager of Billings Company's Office Products Division. "But I want to see the numbers before I make any move. Our division's return on investment (ROD) has led the company for three years, and I don't want any letdown." Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROis. Operating results for the company's Office Products Division for this year are given below: The company had an ovefall return on investment (RO) of 16.00% this year (considering all divisions). Next year the Office Products Division has an opporturity to add a new product line that would require an additional investment that would increase average operating assets by $2.289,300. The cost and revenue characteristics of the new product line per year would be: Required: 1. Compute the Office Products Division's matgin, tumover, and ROI for this year. 2. Compute the Office Products Division's margin, tumover, and ROI for the new product line by itself. 3. Compute the Office Products Dlvision's margin, tumover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasi's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Oifice Products Division to add the new product line? 6. Suppose that the company's minimum required rate of retum on operating assets is 13% and that performance is evaluated using tesidual income