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Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.01 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: Complete this question by entering your answers in the tabs below. a. Operating income increases by 9 percent. b. Operating income decreases by 10 percent. c. The company invests $250,000 in each division, an amount that generates $114,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.01 percent. Req 1 Req 2A Req 2B ROI Residual Income (Loss) $ Req 2C Recalculate ROI and residual income for each division for the independent situation that follows: Operating income decreases by 10 percent. River Division 2.70 % 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. 38,015 River Division $ 1,209,000 898,000 $ 311,000 $ 1,150,000 Req 2D Stream Division $ 1,811,000 1,294,000 $ 517,000 $ 1,560,000 Stream Division 3.31 % $ 42,056 Show less

Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.01 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: Complete this question by entering your answers in the tabs below. a. Operating income increases by 9 percent. b. Operating income decreases by 10 percent. c. The company invests $250,000 in each division, an amount that generates $114,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.01 percent. Req 1 Req 2A Req 2B ROI Residual Income (Loss) $ Req 2C Recalculate ROI and residual income for each division for the independent situation that follows: Operating income decreases by 10 percent. River Division 2.70 % 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. 38,015 River Division $ 1,209,000 898,000 $ 311,000 $ 1,150,000 Req 2D Stream Division $ 1,811,000 1,294,000 $ 517,000 $ 1,560,000 Stream Division 3.31 % $ 42,056 Show less

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 1CE: Forchen, Inc., provided the following information for two of its divisions for last year: Required:...
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Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.01 percent. Complete this question by entering your answers in the tabs below. 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 10 percent. c. The company invests $250,000 in each division, an amount that generates $114,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.01 percent. Req 1 Req 2A Req 2B ROI Residual Income (Loss) $ Req 2C Recalculate ROI and residual income for each division for the independent situation that follows: Operating income decreases by 10 percent. River Division 2.70 % 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. 38,015 Req 2D River Division $ 1,209,000 898,000 $ 311,000 $ 1,150,000 Stream Division $ 1,811,000 1,294,000 $ 517,000 $ 1,560,000 Stream Division 3.31 % $ 42,056 Show less A
Transcribed Image Text:Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.01 percent. Complete this question by entering your answers in the tabs below. 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 10 percent. c. The company invests $250,000 in each division, an amount that generates $114,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.01 percent. Req 1 Req 2A Req 2B ROI Residual Income (Loss) $ Req 2C Recalculate ROI and residual income for each division for the independent situation that follows: Operating income decreases by 10 percent. River Division 2.70 % 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. 38,015 Req 2D River Division $ 1,209,000 898,000 $ 311,000 $ 1,150,000 Stream Division $ 1,811,000 1,294,000 $ 517,000 $ 1,560,000 Stream Division 3.31 % $ 42,056 Show less A
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