Question
In: Accounting
Forchen, Inc., provided the following information for two of its divisions for last year: Small...
Forchen, Inc., provided the following information for two of its divisions for last year:
| Small Appliances Division |
Cleaning Products Division |
|
| Sales | $34,690,000 | $31,350,000 |
| Operating income | 2,365,700 | 1,252,700 |
| Operating assets, January 1 | 6,397,000 | 5,670,000 |
| Operating assets, December 31 | 7,550,000 | 6,590,000 |
Forchen, Inc., requires an 7 percent minimum rate of return.
Required:
1. Calculate residual income for the Small Appliances Division.
$ _____
2. Calculate residual income for the Cleaning Products Division.
$ _____
3. What if the minimum required rate of return was 8 percent? How would that affect the residual income of the two divisions?
| Small Appliances Division residual income would be | HIGHER/LOWER/UNAFFECTED |
| Cleaning Products Division residual income would be | HIGHER/LOWER/UNAFFECTED |
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Forchen, Inc., provided the following information for two of its divisions for last year: Small...
Forchen, Inc., provided the following information for two of its
divisions for last year:
Small Appliances
Division
Cleaning Products
Division
Sales
$34,600,000
$31,350,000
Operating income
2,762,000
1,252,200
Operating assets, January 1
6,396,000
5,700,000
Operating assets, December 31
7,530,000
6,250,000
Forchen, Inc., requires an 8 percent minimum rate of return.
Required:
1. Calculate residual income for the Small
Appliances Division.
$
2. Calculate residual income for the Cleaning
Products Division.
$
3. What if the
minimum required rate of return...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last...
Calculating Residual Income
Forchen, Inc., provided the following information for two of its
divisions for last year:
Small Appliances
Division Cleaning Products
Division
Sales $34,630,000
$31,350,000
Operating income 2,653,000
1,253,000
Operating assets, January 1 6,393,000
5,730,000
Operating assets, December 31
7,530,000
6,040,000
Forchen, Inc., requires an 6 percent minimum rate of return.
Required:
1. Calculate residual income for the Small Appliances
Division.
$
2. Calculate residual income for the Cleaning Products
Division.
$
3. What if the minimum required...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last...
Calculating Residual Income
Forchen, Inc., provided the following information for two of its
divisions for last year:
Small Appliances
Division
Cleaning Products
Division
Sales
$34,600,000
$31,350,000
Operating income
2,292,600
1,254,500
Operating assets, January 1
6,392,000
5,620,000
Operating assets, December 31
7,540,000
6,860,000
Forchen, Inc., requires an 6 percent minimum rate of return.
Required:
1. Calculate residual income for the Small
Appliances Division.
$ ___________
2. Calculate residual income for the Cleaning
Products Division.
$ ___________
3. What if the...
Arlington Clothing, Inc., shows the following information for its two divisions for year 1. Lake Region...
Arlington Clothing, Inc., shows the following information for
its two divisions for year 1.
Lake Region
Coastal Region
Sales revenue
$
4,020,000
$
12,930,000
Cost of sales
2,621,300
6,465,000
Allocated corporate overhead
241,200
775,800
Other general and administration
539,900
3,741,000
Required:
b-1. What are the gross margin and operating
margin percentages for both divisions?
Lake Region
Coastal Region
Gross margin percentage
%
%
Operating margin
%
%
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information...
Calculating Average Operating Assets, Margin, Turnover, Return
on Investment (ROI)
Forchen, Inc., provided the following information for two of its
divisions for last year:
Small Appliances
Division
Cleaning Products
Division
Sales
$34,670,000
$34,800,000
Operating income
2,773,600
1,392,000
Operating assets, January 1
6,394,000
5,600,000
Operating assets, December 31
7,474,000
6,000,000
Required:
1. For the Small Appliances Division,
calculate:
a. Average operating assets
$
b. Margin
%
c. Turnover
d. Return on investment (ROI)
%
2. For the Cleaning Products Division,
calculate:...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information...
Calculating Average Operating Assets, Margin, Turnover, Return
on Investment (ROI)
Forchen, Inc., provided the following information for two of its
divisions for last year:
Small Appliances
Division
Cleaning Products
Division
Sales
$34,670,000
$29,000,000
Operating income
2,773,600
1,160,000
Operating assets, January 1
6,394,000
5,600,000
Operating assets, December 31
7,474,000
6,000,000
Required:
1. For the Small Appliances Division,
calculate:
a. Average operating assets
$ fill in the blank 1
b. Margin
fill in the blank 2
%
c. Turnover
fill in the...
Barnes & Noble Inc. reported the following financial information for its last fiscal year (all numbers...
Barnes & Noble Inc. reported the following financial
information for its last fiscal year (all numbers in
thousands):
Revenues $6,839,005
Inventory $1,410,769
A/P $1,374,434
A/R $149,369
AAI 105.21 days
APP 100.86 days
ACP 8.52 days
For the upcoming fiscal year B&N management has set a goal for
the company to reduce the average age of inventory to 90 days. What
would the impact be on the CCC?
The CCC will decrease by 25.14 days
The CCC will decrease by 15.21...
As a recently hired accountant for a small business, SMC, Inc., you are provided with last...
As a recently hired accountant for a small business, SMC, Inc.,
you are provided with last year’s balance sheet, income statement,
and post-closing trial balance to familiarize yourself with the
business.
You are also given the following information that summarizes the
business activity for the current year,2020
As arecently hired accountantfor a smallbusiness,SMC,Inc., you
are providedwithlast year’s balance sheet, income statement, and
post-closing trial balance to familiarize yourself with the
business. SMC, Inc. Balance Sheet December 31, 2019 Assets
Cash...
As a recently hired accountant for a small business, SMC, Inc., you are provided with last...
As a recently hired accountant for a small
business, SMC, Inc., you are provided with last year’s balance
sheet, income statement, and post-closing trial balance to
familiarize yourself with the business.
SMC, Inc.
Balance sheet
December 31, 2019
Assets
$34,500
Cash
$25,000
Accounts receivable
$10,000
Supplies
$200
Total assets
$69,700
Liabilities and stockholders equity
Liabilities:
Accounts payable
$12,000
Salaries payable
$1,000
Income taxes payable
$3,675
Total liabilities
$16,675
Stockholders equity:
Capital stock (10,000 shares
outstanding)
$25,000
Retained earnings
$28,025...
As a recently hired accountant for a small business, SMC, Inc., you are provided with last...
As a recently hired accountant for a small business, SMC,
Inc., you are provided with last year’s balance sheet, income
statement, and post-closing trial balance to familiarize yourself
with the business.
SMC, Inc.
Balance sheet
December 31, 2019
Assets $34,500
Cash $25,000
Accounts receivable $10,000
Supplies $200
Total assets $69,700
Liabilities and stockholders equity
Liabilities:
Accounts payable $12,000
Salaries payable $1,000
Income taxes payable $3,675
Total liabilities $16,675
Stockholders equity:
Capital stock (10,000 shares outstanding) $25,000
Retained earnings $28,025
Total...
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