https//edugen.wileyplus.com/edugen/student/mainfr.uni nment Exercise 10-21 Prese

ID: 2519756 • Letter: H

Question

https//edugen.wileyplus.com/edugen/student/mainfr.uni nment Exercise 10-21 Presented below is selected financial information for two divisions of Samber Supply the missing information for the lettered items. (Round minimum ra decimal places e.g. 58,971. Lager $500,200 199,000 Lite Lager $299,500 Contribution margin Controllable margin Average operating assetss Minimum rate of return Return on investment Residual income (a) $1,199,700 %(b) 15 % 23 % % (d) $100,100 $204,700 By accessing this Question Assistance, you will learn while you earn points bas : Police l?2000-2018 20hn valed sons-ncil Rights Reserved. A Drnon of lohn earch

Explanation / Answer

Answer:

Larger

Liitle
larger

Contribution margin

500200

299500

Controllable margin

199000

384655

Average Operating Assets

865217.4

1199700

Minimum rate of return

11.43%

15%

Return on investment

23%

32.06%

Residual Inomce

100100

204700

Working notes for the above answer is as under

Lager :-

Average operating assets

= 199000 / 0.23

= $ 865217.4

Minimum rate of return=( Actual profit - Residual Income)/ Average operating assets

Minimum rate of return=(199,000-10100)/865217.4

=98900/ 865217.4

Minimum rate of return = 11.43 %

Lite Lager :

Residual Income = Controllable Margin - ( Average operating assets * Minimum rate of return )

204700 = Controllable Margin - ( 1199700 * 15 %)

Controllable Margin = $ 384655

return on investment = 384655 / 1199700

= 32.06 %