ADMS 2510 Final: ch11.pdf
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Exhibit 11-2
Manford Inc. has two divisions â Refrigerators and DishWasher.
Manford Company | ||
Segmented IncomeStatements | ||
For the Current Fiscal Year Ended December31 | ||
Refrigerator Division | Dish Washer Division | |
Sales | $10,000,000 | $5,400,000 |
Cost of goods sold | 4,200,000 | 2,660,000 |
Gross margin | 5,800,000 | 2,740,000 |
Allocated overhead (from corporate) | 940,000 | 740,000 |
Selling and administrative expenses | 780,000 | 360,000 |
Operating income | 4,080,000 | 1,640,000 |
Income tax expense (45%) | 1,836,000 | 738,000 |
Net income | $ 2,244,000 | $ 902,000 |
59. Refer to Exhibit 11-2. Using the segmented incomestatements, what is the profit margin ratio for the RefrigeratorDivision (to the nearest hundredth of a percent)?
a. 22.44%
b. 40.80%
c. 58.00%
d. 42.00%
e. None of the answer choices iscorrect.
60. Refer to Exhibit 11-2. Using the segmented incomestatements, what is the profit margin ratio for the Dish WasherDivision (to the nearest hundredth of a percent)?
a. 30.37%
b. 50.74%
c. 16.70%
d. 49.26%
e. None of the answer choices iscorrect.
61. Refer to Exhibit 11-2. Assume the RefrigeratorDivision has average operating assets totaling $24,000,000 for theyear. What is the division's return on investment (to the nearesthundredth of a percent)?
a. 40.80%
b. 17.00%
c. 24.17%
d. 58.00%
e. None of the answer choices iscorrect.
62. Refer to Exhibit 11-2. Assume the RefrigeratorDivision has average operating assets totaling $24,000,000 for theyear and the company's cost of capital rate is 15 percent. What isthe residual income for the Refrigerator division?
a. $2,200,000
b. $2,580,000
c. $6,400,000
d. $480,000
e. None of the answer choices iscorrect.
63. Refer to Exhibit 11-2. Assume the Dish WasherDivision has average operating assets totaling $6,560,000 for theyear and the company's cost of capital rate is 15 percent. What isthe residual income for the Dish Washer division?
a. $656,000
b. $4,744,000
c. $246,000
d. $2,084,000
e. None of the answer choices iscorrect.
56. Refer to Exhibit 10-2. What is the standard cost per unitfor variable manufacturing overhead?
a. $16.00
b. $4.80
c. $1.44
d. $10.00
e. None of the answer choices is correct.
Exhibit 11-1
Ashville Company has two divisions â Bikes and Trikes.
Ashville Company | ||
Segmented Income Statements | ||
For the Current Fiscal Year Ended December31 | ||
Bikes Division | Trikes Division | |
Sales | $2,400,000 | $1,000,000 |
Cost of goods sold | 1,400,000 | 530,000 |
Gross margin | 1,000,000 | 470,000 |
Allocated overhead (from corporate) | 270,000 | 170,000 |
Selling and administrative expenses | 190,000 | 140,000 |
Operating income | 540,000 | 160,000 |
Income tax expense (40%) | 216,000 | 64,000 |
Net income | $ 324,000 | $ 96,000 |
56. Refer to Exhibit 11-1. Using the segmented incomestatements, what is the profit margin ratio for the Trikes Division(to the nearest tenth of a percent)?
a. 47%
b. 53%
c. 9.6%
d. 16.0%
e. None of the answer choices is correct.
57. Refer to Exhibit 11-1. Assume the Trikes Division hasaverage operating assets totaling $400,000 for the year. What isthe division's return on investment?
a. 19.2%
b. 40.0%
c. 90.0%
d. 24.0%
e. None of the answer choices is correct.
58. Refer to Exhibit 11-1. Assume the Trikes Division hasaverage operating assets totaling $400,000 for the year and thecompany's cost of capital rate is ten percent. What is the residualincome for the Trikes division?
a. $585,000
b. $1,380,000
c. $24,000
d. $120,000
e. None of the answer choices is correct.