An asterisk (*) will appear to the right of an incorrect entry in the income statement and above or below
elements in the equations.
1.
Rate of Return (ROI) on Investment = Profit Margin x Investment Turnover
Sales
Electronics Division:
2.
Proposal 1 Proposal 2 Proposal 3
Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
Invested assets
3.
Rate of Return (ROI) on Investment = Profit Margin x Investment Turnover
Sales
Proposal 1:
Proposal 2:
Proposal 3:
=
x
=
x
=
x
Score:
Key Code:
Instructions
For the Year Ended December 31, 2016
0%
GIHBLI INDUSTRIES INC.⎯ELECTRONICS DIVISION
Estimated Income Statements
[Key code here]
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Invested Assets
x
x
Sales
Problem 24-4B
Name:
Section:
Invested Assets
ROI
=
x
=
Rate of Return (ROI) on Investment
=
Income from Operations
=
ROI
=
Rate of Return (ROI) on Investment
=
Income from Operations
ROI
=
ROI
Sales
4.
meet(s) the required 20% rate of return on investment.
5.
Rate of return on investment (ROI) = Profit margin x Required investment turnover
= x Required investment turnover
Required investment turnover =
Current investment turnover =
Increase in investment turnover =
An asterisk (*) will appear to the right of an incorrect entry in the income statement and above or below
elements in the equations.
1.
Rate of Return (ROI) on Investment = Profit Margin x Investment Turnover
Sales
Electronics Division:
2.
Proposal 1 Proposal 2 Proposal 3
Sales 1,575,000$ 1,395,000$ 1,575,000$
Cost of goods sold 859,600 771,450 702,000
3.
Rate of Return (ROI) on Investment = Profit Margin x Investment Turnover
Sales
Proposal 1:
$157,400 $1,575,000
$1,575,000 $750,000
Sales
Invested Assets
=
x
21.0%
Invested Assets
ROI
=
x
=
For the Year Ended December 31, 2016
GIHBLI INDUSTRIES INC.⎯ELECTRONICS DIVISION
Estimated Income Statements
Rate of Return (ROI) on Investment
Income from Operations
Rate of Return (ROI) on Investment
=
Income from Operations
x
Sales
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Score:
Instructions
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Problem 24-4B
Name:
Solution
Section:
ON
12.0%
=
=
x
4.
meet(s) the required 20% rate of return on investment.
5.
Rate of return on investment (ROI) = Profit margin x Required investment turnover
20% =8% x Required investment turnover
Proposal 1
An asterisk (*) will appear to the right of an incorrect entry in the income statement and above or below
elements in the equations. The essay answer will not be graded.
1.
Business Consumer
Division Division
Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
2.
Rate of Return (ROI) on Investment = Profit Margin x Investment Turnover
Sales
Business Division:
Consumer Division:
3.
Business Consumer
Division Division
Income from operations
Minimum acceptable return
Residual income
4.
x
=
Sales
Invested Assets
ROI
=
x
=
x
Income from Operations
0%
Divisional Income Statements
For the Year Ended December 31, 2016
Rate of Return (ROI) on Investment
=
ROI
Problem 24-5A
Name:
Section:
Score:
Key Code:
Instructions
=
[Key essay answer here]
[Key code here]
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PAVONE COMPANY
An asterisk (*) will appear to the right of an incorrect entry in the income statement and above or below
elements in the equations. The essay answer will not be graded.
1.
Business Consumer
Division Division
x
=
=
=
=
x
Sales 2,500,000$ 2,550,000$
Cost of goods sold 1,320,000 1,350,000
2.
Rate of Return (ROI) on Investment = Profit Margin x Investment Turnover
Sales
3.
Business Consumer
Division Division
Income from operations 250,000$ 357,000$
4.
Sales
Invested Assets
=
x
Rate of Return (ROI) on Investment
Income from Operations
Score:
Instructions
Answers are entered in the cells with gray backgrounds.
For the Year Ended December 31, 2016
PAVONE COMPANY
Divisional Income Statements
On the basis of income from operations, the Consumer Division generated $107,000 ($357,000
– $250,000) more income from operations than did the Business Division. However, income
Problem 24-5A
Name:
Solution
Section:
ON
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– $250,000) more income from operations than did the Business Division. However, income
ug gher pr argi
An asterisk (*) will appear to the right of an incorrect entry in the income statement and above or below
elements in the equations. The essay answer will not be graded.
1.
Road Mountain
Bike Bike
Division Division
Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
2.
Rate of Return (ROI) on Investment = Profit Margin x Investment Turnover
Sales
Road Bike Division
Mountain Bike Division
3.
Road Mountain
Bike Bike
Division Division
Income from operations
Minimum acceptable return
Residual income
4.
Income from Operations
Sales
Invested Assets
x
ROI
=
x
=
=
x
=
ROI
Score:
Key Code:
Instructions
=
Problem 24-5B
Name:
Section:
0%
[Key essay answer here]
[Key code here]
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FREE RIDE BIKE COMPANY
Divisional Income Statements
For the Year Ended December 31, 2016
Rate of Return (ROI) on Investment
An asterisk (*) will appear to the right of an incorrect entry in the income statement and above or below
elements in the equations. The essay answer will not be graded.
1.
Road Mountain
Bike Bike
Division Division
=
x
=
=
=
x
Sales 1,728,000$ 1,760,000$
2.
Rate of Return (ROI) on Investment = Profit Margin x Investment Turnover
Sales
Road Bike Division
3.
Road Mountain
Bike Bike
Division Division
Income from operations 172,800$ 123,200$
4.
Income from Operations
Sales
Rate of Return (ROI) on Investment
Invested Assets
=
x
Score:
Instructions
Answers are entered in the cells with gray backgrounds.
For the Year Ended December 31, 2016
FREE RIDE BIKE COMPANY
Divisional Income Statements
On the basis of income from operations, the Road Bike Division generated $49,600 ($172,800 –
$123,200) more income from operations than did the Mountain Bike Division. However, income
Problem 24-5B
Name:
Solution
Section:
ON
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On the basis of income from operations, the Road Bike Division generated $49,600 ($172,800 –
ug prof argi
Mountain Bike Division (10.0% vs. 7.0%), the investment turnover in the Road Bike Division is
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Enter a zero in cells you would otherwise leave blank.
1.
2.
3.
Consumer Commercial
Division Division Total
Sales:
14,400 units per unit
2,880 units per unit
21,600 units per unit
Total
Expenses:
Variable:
17,280 units per unit
2,880 units per unit
18,720 units per unit
Fixed
Total expenses
Income from operations
4.
Divisional Income Statements
For the Year Ended December 31, 2016
[Key code here]
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GARCON INC.
[Key essay answer here]
[Key essay answer here]
Score:
Key Code:
Instructions
Problem 24-6A
Name:
Section:
0%
5.
a.
b.
[Key essay answer here]
[Key essay answer here]
[Key essay answer here]
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Enter a zero in cells you would otherwise leave blank.
1.
2.
3.
Consumer Commercial
Division Division Total
Sales:
14,400 units $144 per unit 2,073,600$ –$ 2,073,600$
4.
ON
Score:
Instructions
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Problem 24-6A
Name:
Solution
Section:
For the Year Ended December 31, 2016
GARCON INC.
Divisional Income Statements
No. When unused capacity exists in the supplying division (the Consumer Division), the use of the
The Consumer Division’s income from operations would increase by $31,680 [($115 – $104) × 2,880].
By selling to the Commercial Division, the Consumer Division earns $11 per unit on these sales. The
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2,880 units $115 per unit 331,200 – 331,200
21,600 units $275 per unit – 5,940,000 5,940,000
5.
a.
Any transfer price greater than the Consumer Division’s variable expenses per unit of $104 but less
If the division managers cannot agree on a transfer price, a price of $127 would be the best
The Consumer Division’s income from operations would increase by $63,360 [($126 – $104) × 2,880].
By selling to the Commerical Division, the Consumer Division earns $22 per unit on these sales. The
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Enter a zero in cells you would otherwise leave blank.
1.
2.
3.
Semi- Navigational
conductors Systems Total
Sales:
2,240 units per unit
580 units per unit
3,675 units per unit
Total
Expenses:
Variable:
2,820 units per unit
580 units per unit
3,095 units per unit
Fixed
Total expenses
Income from operations
4.
0%
[Key essay answer here]
Score:
Key Code:
Instructions
Divisional Income Statements
For the Year Ended December 31, 2016
[Key code here]
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EXOPLEX INDUSTRIES INC.
[Key essay answer here]
Problem 24-6B
Name:
Section:
5.
a.
b.
[Key essay answer here]
[Key essay answer here]
[Key essay answer here]
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Enter a zero in cells you would otherwise leave blank.
1.
2.
3.
Semi- Navigational
conductors Systems Total
Sales:
2,240 units $396 per unit 887,040$ –$ 887,040$
580 units $310 per unit 179,800 – 179,800
4.
Divisional Income Statements
No. When unused capacity exists in the supplying division (the Semiconductors Division), the use of
The Semiconductors Division’s income from operations would increase by $45,240 [($310 – $232) ×
580]. By selling to the Navigational Systems Division, the Semiconductors Division earns $78 per unit
Problem 24-6B
Name:
Solution
Section:
ON
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Score:
Instructions
Answers are entered in the cells with gray backgrounds.
For the Year Ended December 31, 2016
EXOPLEX INDUSTRIES INC.
3,675 units $590 per unit – 2,168,250 2,168,250
5.
Any transfer price greater than the Semiconductors Division’s variable expenses per unit of $232 but
If the division managers cannot agree on a transfer price, a price of $332 would be the best
The Semiconductors Division’s income from operations would increase by $62,640 [($340 – $232) ×
580]. By selling to the Navigational Systems Division, the Semiconductors Division earns $108 per unit