BUS 3304 UOPEOPLE Operating Profit And Asset Turnover Journal
Reading Assignment
Chapter Ten, How do Managers Evaluate Performance Using Cost Variance Analysis?, we re-visit the flexible budget model we learned about in BU1301, Financial Accounting. This chapter takes us much deeper into the details of each component sub-budget and how each component relates to the master budget.
Chapter Eleven, How do Managers Evaluate Performance in Decentralized Organizations?, introduces us to a number of ways of viewing segments of a large company and discusses an important assessment tool, the return-on-investment (ROI) calculation.
Discussion Assignment
Describe operating profit margin and asset turnover, and explain how each of these ratios can be used to help division managers improve ROI.
Accounting Assignment
Pool Accessories, Inc., has two divisions—Furniture and Supplies. (This is the same company as the previous exercise. This exercise can be assigned independently.) Segmented income statement information for the most recent fiscal year ended December 31 is shown as follows. Assume the Furniture division had average operating assets totaling $6,500,000 for the year, and the Supplies division had average operating assets of $1,750,000.
Pool Accessories, Inc.
Segmented Income Statements
For the Current Fiscal Year Ended December 31
Furniture Division
Supplies Division
Sales
$3,000,000
$1,000,000
Cost of Goods Sold
1,600,000
430,000
Gross Margin
$1,400,000
$570,000
Allocated Overhead
375,000
125,000
Selling and Administrative Expenses
250,000
200,000
Operating Income
$775,000
$245,000
Income Tax Expense (30% rate)
232,500
73,500
Net Income
$542,500
$171,500
Required:
a. Calculate ROI for each division. What does ROI tell us about each division? Indicate why this measure is useful in evaluating investment centers.
Learning Journal
The Learning Journal is a space where you should reflect upon what was learned during the week. How it applies to your daily life and will help you with your life (career) goals. For this week’s reflection, please write three complete and well composed paragraphs (in your own words) where you use, as an example, a large company that you know about that would have many units of operations. How do you think the leadership of that company monitors routine activity and reacts to unexpected events? How would you organize the business?
- Heisinger, K., & Hoyle, J. B. (2012). Managerial Accounting. Creative Commons by-nc-sa 3.0. https://open.umn.edu/opentextbooks/textbooks/managerial-accounting
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
