Ch12exercises

Ch12exercises - Chapter 12 Review Exercises Consider the...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 12 Review Exercises: Consider the following data for the two divisions of Peter Piper Pizza: Northwest Region Southwest Region Average Operating Assets $6,000,000 $6,000,000 Sales Revenue $18,000,000 $9,000,000 Less: Operating expenses (17,460,000) (8,100,000) Operating Income $40,000 $900,000 1. Compute the turnover, margin, return on investment, and residual income for each division. Assume a 10% hurdle rate. 2. Explain the relationship between each division’s residual income and its return on investment. 3. The manager of the Southwest Region has the opportunity to invest an additional $2,000,000 in a project expected to generate additional operating income of $220,000 per year. Calculate Southwest’s new return on investment and residual income if the manager accepts the project. 4. Would Southwest’s manager, who is evaluated, based on the region’s ROI, want to invest in the project? If the evaluation were based on the region’s residual income? Why or why not? Norshon Company recently had a computer malfunction and lost a portion of its accounting records.
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/29/2011 for the course ACC 2362 taught by Professor Thoede during the Fall '07 term at Texas State.

Page1 / 2

Ch12exercises - Chapter 12 Review Exercises Consider the...

This preview shows document pages 1 - 2. Sign up to view the full document.

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