Question

In: Accounting

Vicon Manufacturing Bhd has reported the following results for last year’s operation: Sales RM30 million Net...

Vicon Manufacturing Bhd has reported the following results for last year’s operation:

Sales

RM30 million

Net operating income

RM 5 million

Average operating assets

RM 15 million

Required:

(a) Compute Vicon Manufacturing Bhd’s margin.

[ 3 marks ]

(b) Compute Vicon Manufacturing Bhd’s turnover.

[ 3 marks ]

(c) Compute the Vicon Manufacturing Bhd’s return on investment.

[ 3 marks ]

(d) Chief Executive Officer of Vicon Manufacturing Bhd has set a minimum required rate of return on average operating assets of 20%, What is the Vicon Manufacturing Bhd’s residual income for the year?

[ 4 marks ]

(e) Explain the relationship between return on investment and residual income.

[ 6 marks ]

(f) Why return on investment and residual income are important for performance measurement in decentralised organisation?

[ 6 marks ]

Solutions

Expert Solution

ekkarill92 answered 3 years ago
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