Question
In: Accounting
Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below: Division...
Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below:
| Division | ||||
| Queensland | New South Wales | |||
| Sales | $ | 2,176,000 | $ | 3,445,000 |
| Average operating assets | $ | 640,000 | $ | 650,000 |
| Net operating income | $ | 250,240 | $ | 275,600 |
| Property, plant, and equipment (net) | $ | 264,000 | $ | 214,000 |
Required:
1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover.
2. Which divisional manager seems to be doing the better job?
Solutions
Expert Solution
|
Queensland |
|
return on investment = profit margin x assets turnover ratio |
|
= 11.5 x 2.40 |
|
= 27.6 |
|
profit margin = net operating income / sale |
|
= 250,240 / 2,176,000 |
|
= 0.115 x 100 = 11.5 |
|
assets turnover = sale / total assets |
|
= 2,176,000 / 904,000 |
|
= 2.40 |
|
total assets = operating assets + fixed assets |
|
= 640,000 + 264,000 |
|
= 904,000 |
|
New South Wales |
|
return on investment = profit margin x assets turnover ratio |
|
= 8 x 3.98 |
|
= 31.84 |
|
profit margin = net operating income / sale |
|
= 275,600 / 3,445,000 |
|
= 0.08 x 100 = 8% |
|
assets turnover = sale / total assets |
|
= 3,445,000 / 864,000 |
|
= 3.98 |
|
total assets = operating assets + fixed assets |
|
= 650,000 + 214,000 |
|
= 864,000 |
Manager of New South Wales division seems to be doing a better job because its return on investment is 31.84 which are higher than division Queensland.
ekkarill92 answered 2 years agoRelated Solutions
Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below: Division...
Selected operating data for two divisions of Outback Brewing,
Ltd., of Australia are given below:
Division
Queensland
New South Wales
Sales
$
864,000
$
2,016,000
Average operating assets
$
540,000
$
630,000
Net operating income
$
60,480
$
80,640
Property, plant, and equipment
(net)
$
247,000
$
197,000
Required:
1. Compute the rate of return for each division using the return
on investment (ROI) formula stated in terms of margin and
turnover.
2. Which divisional manager seems to be doing...
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,000,000
$
14,000,000
$
25,000,000
Average operating assets
$
3,000,000
$
7,000,000
$
5,000,000
Net operating income
$
600,000
$
560,000
$
800,000
Minimum required rate of return
14
%
10
%
16
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,600,000
$
35,750,000
$
20,600,000
Average operating assets
$
3,150,000
$
7,150,000
$
5,150,000
Net operating income
$
516,600
$
572,000
$
597,400
Minimum required rate of return
9.00
%
9.50
%
11.60
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
5,100,000
$
9,100,000
$
8,200,000
Average operating assets
$
1,020,000
$
2,275,000
$
1,640,000
Net operating income
$
214,200
$
746,200
$
118,900
Minimum required rate of return
17.00
%
32.80
%
14.00
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A Division B Division C Sales $ 12,280,000 $ 35,350,000 $
20,280,000 Average operating assets $ 3,070,000 $ 7,070,000 $
5,070,000 Net operating income $ 601,720 $ 600,950 $ 567,840
Minimum required rate of return 10.00 % 10.50 % 11.20 % Required:
1. Compute the return on investment (ROI) for each division using
the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,360,000
$
28,360,000
$
25,450,000
Average operating assets
$
3,090,000
$
7,090,000
$
5,090,000
Net operating income
$
494,400
$
453,760
$
636,250
Minimum required rate of return
7.00
%
7.50
%
12.50
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
12,120,000
$
28,120,000
$
20,120,000
Average
operating assets
$
3,030,000
$
7,030,000
$
5,030,000
Net operating
income
$
496,920
$
449,920
$
503,000
Minimum required
rate of return
7.00
%
7.50
%
10.00
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
16,000,000
$
36,000,000
$
20,800,000
Average operating assets
$
3,200,000
$
7,200,000
$
5,200,000
Net operating income
$
752,000
$
576,000
$
540,800
Minimum required rate of return
9.00
%
9.50
%
10.40
%
Required:
1. Compute the margin, turnover, and return on investment (ROI)
for each division.
2. Compute the residual income (loss) for...
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are
given as follows:
Division A
Division B
Division C
Sales
$
5,600,000
$
9,600,000
$
8,700,000
Average operating assets
$
1,120,000
$
3,200,000
$
1,740,000
Net operating income
$
263,200
$
835,200
$
169,650
Minimum required rate of return
16.00
%
26.10
%
13.00
%
Required:
1.
Compute the return on investment (ROI) for each division using
the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of
different structural engineering firms are given as follows:
Division A
Division B
Division C
Sales
$
6,900,000
$
10,900,000
$
10,000,000
Average operating assets
$
1,725,000
$
5,450,000
$
2,500,000
Net operating income
$
414,000
$
1,090,000
$
325,000
Minimum required rate of
return
19.00
%
20.00
%
16.00
%
Required:
1. Compute the return on investment (ROI) for each division
using the formula stated in terms of margin and...
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