Business, 05.05.2020 09:24 lamwil9432

Anderson Ceramics, a division of Bentfield Corporation, has an operating income of $78,000 and total assets of $416,000. The required rate of return for the company is 13%. The company is evaluating whether it should use return on investment (ROI) or residual income (RI) as a measurement of performance for its division managers.
The manager of Anderson Ceramics has the opportunity to undertake a new project that will require an investment of $104,000. This investment would earn $15,600 for the company.
Requirements:
1. What is the original return on investment (ROI) for Anderson Ceramics (before making any additional investment)?
2. What would the ROI be for Anderson Ceramics if this investment opportunity were undertaken? Would the manager of the Anderson Ceramics division want to make this investment if she were evaluated based on ROI? Why or why not?
3. What is the ROI of the investment opportunity? Would the investment be desirable from the standpoint of Bentfield Corporation? Why or why not?
4. What would the residual income (RI) be for Anderson Ceramics if this investment opportunity were to be undertaken? Would the manager of the Anderson Ceramics division want to make this investment if she were evaluated based on RI? Why or why not?
5. What is the RI of the investment opportunity? Would the investment be desirable from the standpoint of Bentfield Corporation? Why or why not?
6. Which performance measurement method, ROI or RI, promotes goal congruence? Why?

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 05:00

Identify an organization with the low-total-cost value proposition and suggest at least two possible measures within each of the four balanced scorecard perspectives.

Answers: 3

Answer

Business, 22.06.2019 19:00

Consider the following information on stocks a, b, c and their returns (in decimals) in each state: state prob. of state a b c boom 20% 0.27 0.22 0.16 good 45% 0.16 0.09 0.07 poor 25% 0.03 0 0.03 bust 10% -0.08 -0.04 -0.02 if your portfolio is invested 25% in a, 40% in b, and 35% in c, what is the standard deviation of the portfolio in percent? answer to two decimals, carry intermediate calcs. to at least four decimals.

Answers: 2

Answer

Business, 22.06.2019 23:00

Doogan corporation makes a product with the following standard costs: standard quantity or hours standard price or rate direct materials 2.0 grams $ 7.00 per gram direct labor 1.6 hours $ 12.00 per hour variable overhead 1.6 hours $ 6.00 per hour the company produced 5,000 units in january using 10,340 grams of direct material and 2,320 direct labor-hours. during the month, the company purchased 10,910 grams of the direct material at $7.30 per gram. the actual direct labor rate was $12.85 per hour and the actual variable overhead rate was $5.80 per hour. the company applies variable overhead on the basis of direct labor-hours. the direct materials purchases variance is computed when the materials are purchased. the materials quantity variance for january is:

Answers: 1

Answer

Business, 22.06.2019 23:00

The five steps to financial success a. five money myths b. five foundations

Answers: 1

Answer

You know the right answer?

Anderson Ceramics, a division of Bentfield Corporation, has an operating income of $78,000 and total...

Questions