ORIE_350_Homework__13_fall_2008 - ORIE 350 Homework #13 Due...

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ORIE 350 Homework #13 Due April 30, 2008 1. Westfall Industries has two divisions, Cortland and Bradford. Each is run as an investment center. In the past year, the following data was collected: Cortland Bradford Sales $4,500,000 $10,000,000 Net Operating Income 315,000 900,000 Less: Income Tax 110,250 315,000 Net Income 204,750 585,000 Average Operating Assets 1,500,000 5,000,000 a. Compute the ROI for each division. b. Compute the residual income for each division, assuming the minimum acceptable return is 15% c. Which division is better, based on ROI? d. Which division is better, based upon residual income? 2. Tyra Banks Industries makes swimwear, broken up into Fashion and Competition divisions. During the past year, the financial data for the Competition Division were as follows: Sales $13,600,000 Cost of Goods Sold 6,160,000 4,100,000 Allocated Corporate Expenses: Interest 1,250,000 Allocated Corporate Expenses: Headquarters 1,000,000 Division Operating Assets, 1st quarter 12,000,000 Division Operating Assets, 2nd and 3rd quarters 13,250,000 Division Operating Assets, 4th quarter 16,000,000 a) What is the controllable margin for the Competition Division? b) What was the return on investment for the Competition Division, using the controllable margin approach as discussed in lecture? Please express your answer in terms of a percentage.
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3. Financial data for Bridger Inc. for last year follows: Bridger Inc. Balance Sheet
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This note was uploaded on 04/05/2009 for the course ORIE 350 taught by Professor Callister during the Summer '08 term at Cornell University (Engineering School).

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ORIE_350_Homework__13_fall_2008 - ORIE 350 Homework #13 Due...

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