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Question;roblem 1Chicago Company has the following information pertaining to its Brick division for this year:BricksFixed manufacturing expenses $ 70,000Fixed selling and administrative expenses 60,000Sales 500,000Direct manufacturing costs (variable) 80,000Variable selling and administrative expenses 140,000Corporate expenses allocated to the brick division are $48,000.Calculate the brick division?s division margin.Problem 2Ruby Division had the following information:Current Liabilities $ 3,600,000Investment base 30,000,000Net operating income before taxes 4,000,000Tax rate 35%Cost of capital 10%Calculate Ruby Division's economic value added.Problem 3The Chip Division of Circuit Co has just revised its actual cost data for the year just ended. Chip Division transfers circuit boards to the Assembly Division, and incurs no selling expense for such transfers. Assembly Division can buy the same goods in the open market for $132 each. Chip's new cost data are:Direct materials $ 60Direct labor 30Variable manufacturing overhead 10Fixed manufacturing overhead 8Variable selling expenses 6Fixed selling and administrative expenses 12Total costs $126Desired return 20Sales price $146Current production is 400,000 units, and Chip has a capacity of 600,000 units.Required:a. What is the lowest price Chip should charge for the internal transfer of its goods?b. What is the highest price Assembly should pay Chip for the units?c. Give the primary reason why Chip should reduce its price for internal transfers below the market price.Problem 4Hinsdale Company has the following data for this year:Bottling Division Mixing DivisionAverage operating assets $320,000 $ 800,000Contribution margin 160,000 500,000Operating income 80,000 120,000Sales 400,000 1,200,000Weighted-average cost of capital 18% 18%Hinsdale Company has a target ROI of 18 percent.Required: Calculate the following amounts for each division:a. Return on sales ratiob. Operating investment turnoverc. ROId. Residual income

 

Paper#50882 | Written in 18-Jul-2015

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