Divisional performance measures

Assignment Help Cost Accounting
Reference no: EM13558115

Divisional performance measures

 

Compare and contrast the use of residual income and return on investment in divisional performance measurement, stating the advantages and disadvantages of each.        

 

 

Division Y of Chardonnay currently has capital employed of $100,000 and earns an annual profit after depreciation of $18,000. The divisional manager is considering an investment of $10,000 in an asset which will have a ten-year life with no residual value and will earn a constant annual profit after depreciation of $1,600. The cost of capital is 15%.

 

Calculate the following and comment on the results.

 

(i)

The return on divisional investment, before and after the new investment

 

(ii)

The divisional residual income before and after the new investment

 

 

 

 

 

Explain the potential benefits of operating a transfer pricing system within a divisionalised company.

Reference no: EM13558115

Questions Cloud

How zbb will help to control budgetary slack : How zero based budgeting techniques differ from traditional budgeting and how ZBB may assist in planning and controlling discretionary costs
Estimate what is the true weight of the satellite : A satellite has a mass of 5900 kgand is in a circular orbit 3.0105 m above the surface of a planet. What is the true weight of the satellite when it is at rest on theplanet's surface
Calculate the throughput accounting ratio : Calculate the mix of products A and B which will maximise net profit and the value of that net profit and calculate the throughput accounting ratio for product B and comment on it.
Find to what height above his starting point does edrise : Adolf and Ed are wearing harnesses and are hanging from theceiling by means of ropes attached to them. To what height above his starting point does Edrise
Divisional performance measures : Explain the potential benefits of operating a transfer pricing system within a divisionalised company - Calculate comment on the results - Compare and contrast the use of residual income and return on investment in divisional performance measurement..
What is the totalbound charge on the surface : A point charge q is imbedded at the center of a sphere oflinear dielectric material (with susceptibility and radiusR). What is the totalbound charge on the surface
Npc might fail as a corporate entity : Identify and evaluate the problems or indicators which could indicate that NPC might fail as a corporate entity - tough economic conditions in NPC's country have led to a decline in advertising revenues since 20X7
Non-profit seeking organizations : Suggest a set of quantitative measures which can be used to identify the effective level of achievement of each of the features listed.
How high does the seawater rise in the bell : A cylindrical diving bell 2.00 min diameter and 5.00 m tall with anopen bottom is submerged to a depth of 220 m in the ocean. How high does the seawater rise in the bell when it is submerged inmeters

Reviews

Write a Review

Cost Accounting Questions & Answers

  Determine the book value of bedford''s buildings

Grant Company acquired all of Bedford Corporation's assets and liabilities on January 1, 20X2, in a business combination. At that date, Bedford reported assets with a book value of $641,000 and liabilities of $375,000. Grant noted that Bedford had..

  Prepare last years profit report using contribution margin

Prepare last years profit report using the contribution margin format and calculate the effect this will have on the profitability of the dinner assuming fixed costs will be the same as last year.

  Qwilson companys activity for the first six of the current

qwilson companys activity for the first six of the current year is as followsmonthmachine hourselectrical

  Determine molding departments direct cost variances

Determine the molding department's direct cost variances and overhead variances. Why do you think they occurred and do you think Boston's standards are meaningful?

  Effect of omitting adjustments

Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended August 31, 2014.

  Discuss any trends in the net cash provided in operating

discuss any trends in the net cash provided in operating investing and financing activities for home depot and lowes in

  Prepare the entries to record the sales transactions

Prepare the entries to record the sales transactions and related taxes for (a) Duvall Company and (b) Hubbard Company.

  What is budgeted annual fixed manufacturing overhead

What is budgeted annual fixed manufacturing overhead - if budgeted fixed overhead equals actual fixed overhead, what is underapplied or overapplied fixed overhead in 2010 under absorption costing? Under variable costing?

  Prepare a classified balance sheet - plevin company

Prepare an income statement and an owner's equity statement for the year. Plevin did not make any capital investments during the year and prepare a classified balance sheet at July 31.

  Five years ago heinz purchased a 1200000 term life

five years ago heinz purchased a 1200000 term life insurance policy from west coast life insurance payable to his wife

  Petes pet products is a sole proprietorship owned by pete

petes pet products is a sole proprietorship owned by pete thompson. the store provides a full-line of pet products

  Journalize the adjusting entries - wind river outfitters

Journalize the adjusting entries necessary on February28 - unadjusted trial balance at the end of its first year of operations

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd