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Sales revenue Coolbrook Company has the following information available for the past year: River Division $ 1,215,000 900,000 $ 315,000 $ 1,000,000 Stream Division $ 1,808,000 1,289,000 $ 519,000 $ 1,430,000 Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.51 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: a. Operating income increases by 9 percent. b. Operating income decreases by 11 percent. c. The company invests $252,000 in each division, an amount that generates $107,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.51 percent. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 4.51 percent. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign. ROI Residual Income (Loss) River Division Stream Division % % Show less▲

Sales revenue Coolbrook Company has the following information available for the past year: River Division $ 1,215,000 900,000 $ 315,000 $ 1,000,000 Stream Division $ 1,808,000 1,289,000 $ 519,000 $ 1,430,000 Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.51 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: a. Operating income increases by 9 percent. b. Operating income decreases by 11 percent. c. The company invests $252,000 in each division, an amount that generates $107,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.51 percent. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 4.51 percent. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign. ROI Residual Income (Loss) River Division Stream Division % % Show less▲

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 27E: Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the...
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Sales revenue Coolbrook Company has the following information available for the past year: River Division $ 1,215,000 900,000 $ 315,000 $ 1,000,000 Stream Division $ 1,808,000 1,289,000 $ 519,000 $ 1,430,000 Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.51 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: a. Operating income increases by 9 percent. b. Operating income decreases by 11 percent. c. The company invests $252,000 in each division, an amount that generates $107,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.51 percent. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 4.51 percent. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign. ROI Residual Income (Loss) River Division Stream Division % % Show less▲
Transcribed Image Text:Sales revenue Coolbrook Company has the following information available for the past year: River Division $ 1,215,000 900,000 $ 315,000 $ 1,000,000 Stream Division $ 1,808,000 1,289,000 $ 519,000 $ 1,430,000 Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.51 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: a. Operating income increases by 9 percent. b. Operating income decreases by 11 percent. c. The company invests $252,000 in each division, an amount that generates $107,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.51 percent. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 2C Req 2D Recalculate ROI and residual income for each division for the independent situation that follows: Coolbrook changes its hurdle rate to 4.51 percent. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.). Loss amounts should be indicated with a minus sign. ROI Residual Income (Loss) River Division Stream Division % % Show less▲
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