Solutions -- Week 9

Solutions -- Week 9 - WEEK CLS DATES[M-W 9 DATES[T-Th GNB...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
WEEK 9 GNB ASSIGNED PROBLEM SOLUTIONS BUAD 250B – FALL 2009 CLS DATES [M-W] DATES [T-Th] TOPICS READINGS ASSIGNMENTS [TO BE COMPLETED BY DATE ASSIGNED] 16 Oct 19 Oct 20 Segment Reporting, Decentralization & Balanced Scorecard Ch. 12 BE: 12-1, 2, 3 PR: 12-5, 10 In-class: 23 17 Oct 21 Oct 22 Segment Reporting, Decentralization & Balanced Scorecard Ch. 12 PR: 12-12, 16, 17 In-class: 12-19 Exercise 12-1 Total Weedban Greengrow Sales* . ........................................................ $300,000 $90,000 $210,000 Variable expenses** . .................................. 183,000 36,000 147,000 Contribution margin . ................................... 117,000 54,000 63,000 Traceable fixed expenses . .......................... 66,000 45,000 21,000 Product line segment margin . ..................... 51,000 $ 9,000 $ 42,000 Common fixed expenses not traceable to products . ................................................. 33,000 Net operating income . ................................ $ 18,000 * Weedban: 15,000 units × $6.00 per unit = $90,000. Greengrow: 28,000 units × $7.50 per unit = $210,000. ** Weedban: 15,000 units × $2.40 per unit = $36,000. Greengrow: 28,000 units × $5.25 per unit = $147,000. Exercise 12-2 1. Net operating income Margin = Sales $600,000 = = 8% $7,500,000 2. Sales Turnover = Average operating assets $7,500,000 = = 1.5 $5,000,000 GNB Problem Solutions – Week-by-Week page 1 of 9
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
3. ROI = Margin × Turnover = 8% × 1.5 = 12% Exercise 12-3 Average operating assets . ................................................ £2,800,000 Net operating income . ...................................................... £ 600,000 Minimum required return: 18% × £2,800,000 . ....................................................... 504,000 Residual income . .............................................................. £ 96,000 Exercise 12-5 1. ROI computations: ROI = Margin × Turnover Net operating income Sales = × Sales Average operating assets Osaka Division: ¥210,000 ¥3,000,000 ROI = × ¥3,000,000 ¥1,000,000 = 7% × 3 = 21% Yokohama Division: ¥720,000 ¥9,000,000 ROI = × ¥9,000,000 ¥4,000,000 = 8% × 2.25 = 18% GNB Problem Solutions – Week-by-Week page 2 of 9
Background image of page 2
2. Osaka Yokohama Average operating assets (a) . ................................................... ¥1,000,000 ¥4,000,000 Net operating income . ............................................................... ¥ 210,000 ¥ 720,000 Minimum required return on average operating assets: 15% × (a) . ...................................................................................... 150,000 600,000 Residual income . ....................................................................... ¥ 60,000 ¥ 120,000 3. No, the Yokohama Division is simply larger than the Osaka Division and for this reason one would expect that it would have a greater amount of residual income. Residual income can’t be used to compare the performance of divisions of different sizes. Larger divisions will almost always look better. In fact, in the case above, the Yokohama
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/14/2010 for the course BUAD 250B taught by Professor Jackson during the Spring '07 term at USC.

Page1 / 9

Solutions -- Week 9 - WEEK CLS DATES[M-W 9 DATES[T-Th GNB...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online