will rate

Questions: 1. What is meant by the term decentralization? 2. Distinguish between a cost center, a profit center and an investment center. 3. What is meant by the terms margin and turnover in ROI calculations? 4. In what way can the use of ROI as a performance measure for investment centers lead to bad decisions? How does the residual income approach overcome this problem? 5. Why do the measures used in a balanced scorecard differ from company to company? Problem: The contribution format income statement for Huerta Company for last year is given below: Sales Variable expenses Contribution margin Total Unit $4,000,000 $80.00 2,800,000 56 00 1.200.000 24.00 5. Why do the measures used in a balanced Scorecard differ from company to company? a Problem: The contribution format income statement for Huerta Company for last year is given below Total Unit Sales $4,000,000 $80.00 Variable expenses 2,800,000 56.00 Contribution margin 1200,000 24.00 Fixed expenses 840,000 16.80 Net operating income 360,000 7.20 Income taxes @ 30% 108,000 2.16 Net income $ 252.000 $ 5.04 The company had average operating assets of $2.000.000 during the year. Required: 1. Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover For each of the following questions indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $400,000. (The released funds are used to pay off short-term creditors.)