Willow brook Company has thefollowing data for this year:
Bottling Division
Mixing Division
Average operating assets
$320,000
$ 800,000
Contribution margin
160,000
500,000
Operating income
80,000
120,000
Sales
500,000
1,300,000
Weighted-average cost of capital
17%
17%
Willow brook Company has a target ROIof 17 percent.
Required: Calculate thefollowing amounts for each division:
a. Return on sales ratio
b. Operating investment turnover
c. ROI
d. Residual income
Willow brook Company has thefollowing data for this year:
Bottling Division | Mixing Division | |
Average operating assets | $320,000 | $ 800,000 |
Contribution margin | 160,000 | 500,000 |
Operating income | 80,000 | 120,000 |
Sales | 500,000 | 1,300,000 |
Weighted-average cost of capital | 17% | 17% |
Willow brook Company has a target ROIof 17 percent.
Required: Calculate thefollowing amounts for each division:
a. Return on sales ratio
b. Operating investment turnover
c. ROI
d. Residual income
Related questions
Sprint Company has the following data for 2009:
Division A | Division B | |
| Sales Revenue | $400,000 | $300,000 |
| Contribution margin | 160,000 | 125,000 |
| Operating profit | 80,000 | 30,000 |
| Division Investment | 320,000 | 200,000 |
| Weighted average cost of capital | 15% | 15% |
Sprint Company has a target ROI of 20 percent.
Required:
Calculate the following amounts for each division:
| a. | Investment Turnover. |
| b. | ROI |
| c. | EVA |
Yearly data as followed:
| Division I | Division II | Division III | |
| Sales | $1,000,000 | $2,3600,000 | $1,600,000 |
| number of units sold | 500,000 | 860,000 | 320,000 |
| Contribution margin | 520,000 | 950,000 | 920,000 |
| Direct fixed costs | 118,500 | 755,240 | 463,800 |
| Allocated corporate costs | 40,960 | 204,760 | 76,200 |
| Average net operating assets | $640,000 | $1,600,000 | $840,000 |
| Weighted-average cost of capital | 17% | 17% | 17% |
In addition, there are $190,000 in corporate costs which cannot reasonably be allocated to the divisions.
Company ABC has a target rate of return of 20 percent, and is subject to a 30% tax rate. Division I was recently presented with an investment in a $105,000 piece of machinery that would save operating costs of $5,000 per year over a period of thirty years. The new machinery would replace a current piece of equipment that could be sold for $2,000 and has a book value of $10,000. The manager of Division I, with full decision rights on the matter, decided against replacing the current equipment.
Q: Create a multilevel income statement, showing the three divisional incomes and the corporate net income for Company ABC
