Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
9-94
106. Guerlane Fragrance Corporation has a perfume division, Essense, and a cologne division,
Karisma. The following information relates to last year's operations at each division. The
minimum required rate of return is the same for both divisions.
Essense Karisma
Sales $360,000 (d)
Average operating assets $120,000 (e)
Net operating income (a) $10,000
Margin (b) 5%
Turnover (c) 2.5
Return on investment (ROI) 20% (f)
Residual income $6,000 (g)
Required:
Compute the unknown quantities above [(a) through (g)]. SHOW YOUR COMPUTATIONS.
9-95
107. Faas Wares is a division of a major corporation. The following data are for the latest year
of operations:
Sales $24,480,000
Net operating income $1,738,080
Average operating assets $6,000,000
The company's minimum required rate of return 16%
Required:
a. What is the division's return on investment (ROI)?
b. What is the division's residual income?
108. Eacher Wares is a division of a major corporation. The following data are for the latest
year of operations:
Sales $14,720,000
Net operating income $1,000,960
Average operating asset $4,000,000
The company's minimum required rate of return 14%
Required:
a. What is the division's margin?
b. What is the division's turnover?
c. What is the division's return on investment (ROI)?
d. What is the division's residual income?
109. Hysong Corporation uses residual income to evaluate the performance of its divisions.
The minimum required rate of return for performance evaluation purposes is 11%. The Games
Division had average operating assets of $530,000 and net operating income of $56,200 in June.
Required:
What was the Games Division's residual income in June?
110. Iba Industries is a division of a major corporation. The following data are for the latest
year of operations:
Sales $5,820,000
Net operating income $436,500
Average operating assets $2,000,000
The company's minimum required rate of return 18%
Required:
What is the division's residual income?
111. The Casket Division of Landazuri Corporation had average operating assets of $620,000
and net operating income of $86,000 in February. The company uses residual income to evaluate
the performance of its divisions, with a minimum required rate of return of 14%.
Required:
What was the Casket Division's residual income in February?
112. During the most recent month at Luinstra Corporation, queue time was 4.5 days,
inspection time was 0.8 day, process time was 1.9 days, wait time was 5.1 days, and move time
was 0.7 day.
Required:
a. Compute the throughput time.
b. Compute the manufacturing cycle efficiency (MCE).
c. What percentage of the production time is spent in non-value-added activities?
d. Compute the delivery cycle time.
113. Rintharamy Corporation's management reports that its average delivery cycle time is 25.2
days, its average throughput time is 7.6 days, its manufacturing cycle efficiency (MCE) is 0.25, its
average move time is 0.9 day, and its average queue time is 4.0 days.
Required:
a. What is the wait time?
b. What is the process time?
c. What is the inspection time?
114. Hardenburg Corporation keeps careful track of the time required to fill orders. The times
required for a particular order appear below:
Hours
Wait time 19.9
Process time 1.4
Inspection time 0.1
Move time 3.3
Queue time 9.7
Required:
a. Determine the throughput time. Show your work!
b. Determine the manufacturing cycle efficiency (MCE), Show your work!
c. Determine the delivery cycle time. Show your work!
9-105
115. Pardun Corporation's management keeps track of the time it takes to process orders.
During the most recent month, the following average times were recorded per order:
Days
Wait time 15.6
Inspection time 0.8
Process time 1.6
Move time 0.7
Queue time 3.9
Required:
a. Compute the throughput time.
b. Compute the manufacturing cycle efficiency (MCE).
c. What percentage of the production time is spent in non-value-added activities?
d. Compute the delivery cycle time.
