Acc homework 10-3, 10-10, 10-13

Acc homework 10-3, 10-10, 10-13 - Direct Fixed Expenses...

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Christine Van Pelt Problem 10-3 North Town Community Hospital Investment Center Corporate human resources Cost Center North Town Community Hospital Pharmacy Profit Center Maintenance department Cost Center Hospital cafeteria Profit Center Radiology department Profit Center Problem 10-10 Information: Retail Stores Internet Catalog Sales Sales Revenue $12,000,000 $2,750,000 $3,600,000 Variable Expenses $4,800,000 $1,375,000 $2,160,000 Direct Fixed Expenses $6,720,000 $1,115,000 $990,000 Operating Income/Segment Margin $480,000 $260,000 $450,000 Average Assets $6,000,000 $2,000,000 $3,000,000 Required Rate of Return 12% 12% 12% Margin = (operating income) / (sales revenue) Asset Turnover = (sales revenue) / (average operating assets) ROI = margin x asset turnover Retail Stores Internet Catalog Sales Margin 4% 9% 13% Asset Turnover 2.0 1.4 1.2 ROI 8% 13% 15% 10-10 B Problem 10-13 10-13 A Information: Retail Stores Internet Catalog Sales Sales Revenue $12,000,000 $2,750,000 $3,600,000 Variable Expenses $4,800,000 $1,375,000 $2,160,000
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Unformatted text preview: Direct Fixed Expenses $6,720,000 $1,115,000 $990,000 Operating Income/Segment Margin $480,000 $260,000 $450,000 Average Assets $6,000,000 $2,000,000 $3,000,000 Required Rate of Return 12% 12% 12% Retail Stores Internet Catalog Sales Residual Income ($240,000) $20,000 $90,000 10-13 B (with the new manager system) Retail Stores Internet Catalog Sales $545,000 $325,000 $515,000 ($175,000) $85,000 $155,000 10-13 C If the new system will help increase ROI and the managers are evaluated on their ROI, then Retail stores will be looking into this system to up their ROI. Residual Income = Operating income - (Average Assets x Required Minimum Rate of Return) Operating Income (with the additional $65,000) Residual Income with the new system Buying the system only effected operating income (segment margin). By spending $500,000, we decreased cash by $500,00 but increased our property by $500,000 so Average Assets was not affected....
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This note was uploaded on 01/17/2012 for the course ACC 2304 taught by Professor Robinson during the Spring '08 term at Baylor.

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