Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama Sales $ 3,000,000 $ 9,000,000 Net operating income $ 210,000 $ 720,000 Average operating assets $ 1,000,000 $ 4,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division.

Answer:

Return on Investment (ROI)

In terms of margin :

Division Osaka (ROI) = 21.00 %

Division Yokohama (ROI) = 18.75%

In terms of turnover :

Division Osaka (ROI) = 300%

Division Yokohama (ROI) = 225%

Residual Income

Division Osaka  =   $60,000

Division Yokohama  =  $120,000

Explanation:

Return on Investment = Divisional Profit Contribution / Assets Employed in the Division x 100

In terms of margin  :

Division Osaka (ROI) = $ 210,000 / $ 1,000,000 x 100 = 21.00 %

Division Yokohama (ROI) = $ 720,000 / $ 4,000,000 x 100 = 18.75%

In terms of turnover :

Division Osaka (ROI) = $ 3,000,000 / $ 1,000,000 x 100 = 300%

Division Yokohama (ROI) = $ 9,000,000 / $ 4,000,000 x 100 = 225%

Residual Income = Controllable Profit - Cost of Capital Charge on Investment Controllable by Divisional Manager

Division Osaka  = $ 210,000 - $ 1,000,000 x 15% =  $60,000

Division Yokohama  = $ 720,000 - $ 4,000,000 x 15% = $120,000

Florida Seaside Oil Exploration Company is deciding whether to drill for oil off the northeast coast of Florida. The company estimates that the project would cost $4.24 million today. The firm estimates that once drilled, the oil will generate positive cash flows of $2.12 million a year at the end of each of the next four years. While the company is fairly confident about its cash flow forecast, it recognizes that if it waits two years, it would have more information about the local geology as well as the price of oil. Florida Seaside estimates that if it waits two years, the project would cost $4.59 million. Moreover, if it waits two years, there is a 85% chance that the cash flows would be $2.306 million a year for four years, and there is a 15% chance that the cash flows will be $0.705 million a year for four years. Assume that all cash flows are discounted at a 8% WACC. Will the company delay the project and wait until they have more information

Ahnberg Corporation had 580,000 shares of common stock issued and outstanding at January 1. No common shares were issued during the year, but on January 1, Ahnberg issued 200,000 shares of convertible preferred stock. The preferred shares are convertible into 400,000 shares of common stock. During the year Ahnberg paid $120,000 cash dividends on the preferred stock. Net income was $1,222,000.

Required:
What were Ahnberg's basic and diluted earnings per share for the year?

Recently, the management of Carrefour reviewed its situation under conditions of stagnant growth and increasing competition from international rivals like Wal-Mart, Tesco, etc. A team of consultants has been hired to evaluate the retail giant’s performance. As one of case team members, what metrics would you use to evaluate Carrefour’s performance?

The centralized computer technology department of Hardy Company has expenses of $320,000. The department has provided a total of 4,000 hours of service for the period. The Retail Division has used 2,750 hours of computer technology service during the period, and the Commercial Division has used 1,250 hours of computer technology service. How much should each division be charged for computer technology department services?

Each visor requires a total of $4.00 in direct materials that includes an adjustable closure that the company purchases from a supplier at a cost of $2.00 each. Shadee wants to have 27 closures on hand on May 1, 20 closures on May 31, and 28 closures on June 30 and variable manufacturing overhead is $1.25 per unit produced. Suppose that each visor takes 0.30 direct labor hours to produce and Shadee pays its workers $12 per hour.

Budgeted Production in Units:

May 585
June 410

Required:
a. Determine Shadee's budgeted manufacturing cost per visor. (Note: Assume that fixed overhead per unit is $1.90.) (Round your answer to 2 decimal places.)
b. Compute the Shadee's budgeted cost of goods sold for May and June.

Marigold Corp. issued at a premium of $10500 a $192000 bond issue convertible into 4700 shares of common stock (par value $20). At the time of the conversion, the unamortized premium is $4000, the market value of the bonds is $212000, and the stock is quoted on the market at $60 per share. If the bonds are converted into common, what is the amount of paid-in capital in excess of par to be recorded on the conversion of the bonds

Identify which of the following are primary activities and which are support activities in a value chain. Review Later A Inbound movement of materials Sales and promotion of products/services Management of cash inflows and outflows Movement of final products to customers Acquisition of materials from external source Quality assurance, control systems and work culture Maintenance of products Research and development Primary activities Support activities

Which Finance career involves the stock market?

Financial and Investment Planning

Insurance Services

Business Financial Management

Banking and Related Services

Observation #2
Observation #1
Date
Information about the business:
1. What is the name of the
business?
2. What type of business is it?
3. What products or services
does the business offer?​

Taylor has owned and occupied her personal residence (adjusted basis of $190,000) for four years. In April 2015, she sells the residence for $300,000 (selling expenses are $20,000). On the same day as the sale, Taylor purchases another house for $350,000. Because of noisy neighbors, she sells the new house after just 10 months. The selling price is $483,000 (selling expenses are $18,000).
What is Taylor’s recognized gain on the sale of the first residence?
What is Taylor’s basis for her second residence?
What is Taylor’s recognized gain on the sale of the second residence?
Assume instead that the sale of the second residence was due to Taylor’s job transfer to another state. What is her recognized gain on the sale of the second residence?

Penny is paid a gross wage of $2,648.00 on a monthly basis. She is single and is entitled to 2 withholding allowances. How much income tax, social security, and Medicare will be withheld based on the combined wage bracket tables in Exhibits 9-3 and 9-4 from your text

International businesses with markets and production facilities in other countries, or that use materials from different countries need to understand the ways and rates at which currency is converted.

a. True
b. False

On January 1, 2020, Jet Air Inc. contracted with Systems Plus Inc. to manufacture heavy equipment. Jet Air Inc. issued a $135,000 note to Systems Plus Inc. in exchange for the equipment that required 5% interest payments annually over 3 years on December 31 of each year. Although the fair value of the customized heavy equipment was not reasonably determinable, it was determined that 10% was a reasonable rate of interest for such a transaction. Provide journal entries to be made by Jet Air Inc. at each of the following dates. a. January 1, 2020 ---Date of note issuance. b. December 31, 2020 ---Date of interest payment. c. December 31, 2021 ---Date of interest payment. d. December 31, 2022 ---Date of interest payment. e. December 31, 2022 ---Date of note payment at maturity. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round your answer to the nearest whole dollar. Note: Adjust interest expense in 2022 for any net rounding differences.

Company A owns a 40% equity method investment in Company B. Subsequently, Company A acquires a controlling interest in a Company B and now must prepare consolidated financial statements. If the date Company A obtains control occurs midyear, how are subsidiary revenues and expenses reported in consolidated income statement in the year of the business combination

Quantitative Problem: Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 25%. Assume that the firm's cost of debt, rd, is 9.0%, the firm's cost of preferred stock, rp, is 8.2% and the firm's cost of equity is 11.6% for old equity, rs, and 11.9% for new equity, re. What is the firm's weighted average cost of capital (WACC1) if it uses retained earnings as its source of common equity

You own a stock portfolio invested 35 percent in Stock Q, 25 percent in Stock R, 25 percent in Stock S, and 15 percent in Stock T. The betas for these four stocks are .83, 1.21, 1.22, and 1.39, respectively. What is the portfolio beta

Which task do all finance careers have in common, and which task is designed mainly for insurance careers?

a) All finance careers review budgets, and insurance careers help customers complete transactions.

b) All finance careers calculate taxes owed, and insurance careers handle money and analyze credit reports.

c) All finance careers advise customers on finances, and insurance careers handle risk management.

d) All finance careers develop investment strategies, and insurance careers sell financial products.

Sarah Sandoval is a coffee farmer trying to decide how many tons of coffee to produce. She can sell each ton of coffee for $2000. The cost of producing the first ton of coffee is $500, for the second ton, it's $1000. For each additional ton of coffee produced, the marginal cost increases by $500. How many tons of coffee should Sarah produce, and what is the total cost of her coffee production

Variance analysis reports can be prepared to examine the difference between budgeted and actual figures for:

Production in terms of cost, quantity and quality
Sales
Profit
Income per sales dollar
Growth rate

Required:
Complete the following variance analysis report.

Variance Analysis Report Actual Budget Variances
REVENUE 320,000 318,750
Direct Expense (variable) 101,000 100,000
Allocated general expenses (fixed) 78,000 80,000
Allocated service expenses:
Department 1 20,500 20,000
Department 2 65,000 62,500
Department 3 101,500 100,000
TOTAL EXPENSES
NET INCOME

Cullumber Company incurred the following costs while manufacturing its product.

Materials used in product $121,000 Advertising expense $46,000
Depreciation on plant 61,000 Property taxes on plant 15,000
Property taxes on store 7,600 Delivery expense 22,000
Labor costs of assembly-line workers 111,000 Sales commissions 36,000
Factory supplies used 24,000 Salaries paid to sales clerks 51,000

Work in process inventory was $13,000 at January 1 and $16,600 at December 31. Finished goods inventory was $61,000 at January 1 and $45,700 at December 31.

Required:
Compute cost of goods manufactured.

Time, energy, and money are examples of:
-unlimited resources.

-limited resources.

-flexible resources

-fixed resources

Jeremy and Alyssa Johnson have been married for five years and do not have any children. Jeremy was married previously and has one child from the prior marriage. He is self-employed and operates his own computer repair store. For the first two months of the year, Alyssa worked for Office Depot as an employee. In March, Alyssa accepted a new job with Super Toys Inc. (ST), where she worked for the remainder of the year. This year, the Johnsons received $274,000 of gross income.
Expenses associated with Jeremy’s store include $44,750 in salary (and employment taxes) to employees, $50,700 of supplies, and $19,900 in rent and other administrative expenses.
As a salesperson, Alyssa incurred $2,190 in travel expenses related to her employment that were not reimbursed by her employer.
The Johnsons own a piece of raw land held as an investment. They paid $690 of real property taxes on the property and they incurred $295 of expenses in travel costs to see the property and to evaluate other similar potential investment properties.
The Johnsons own a rental home. They incurred $8,690 of expenses associated with the property.
Jeremy paid $4,690 for health insurance coverage for himself (not through an exchange). Alyssa was covered by health plans provided by her employer, but Jeremy is not eligible for the plan until next year.
Jeremy paid $2,690 in self-employment taxes ($1,345 represents the employer portion of the self-employment taxes).
Jeremy paid $5,380 in alimony and $3,285 in child support from his prior marriage (divorced in 2010).
The Johnsons donated $2,190 to their favorite charity.
Determine the Johnson's AGI given the above information:

"Bad news," thought Sloan Simpkins. "At our mid-year financial review meeting, I will be the only division president with year-to-date results that are disappointing. That means that the CEO and CFO will be concentrating their attention on me." If Sloan is correct in his thinking, the CEO and CFO will use _____________ to enhance control by concentrating on significant deviations from the expected results.

Two companies, A and B, both have $1 million in assets, earnings before interest and taxes (EBIT) of $160,000, and the same tax rate. Company A is all equity financed, and Company B is 50% debt financed and 50% equity financed. If Company B's pretax cost of debt is 8%, then Company A will have a ROA that is _____ and a ROE that is _____ than Company B's. a. Option D b. Option B c. Option A d. Option C

Item6 0.5 points Time Remaining 1 hour 22 minutes 30 seconds01:22:30 Item 6 Time Remaining 1 hour 22 minutes 30 seconds01:22:30 Second National Bank (SNB) (million $) Funds borrowed $ 6,500 Maximum amount SNB can still borrow $ 8,500 Cash-type assets $ 3,700 Excess cash reserves $ 80 Federal Reserve borrowings $ 20 What are Second National Bank's total sources of liquidity? Multiple Choice $6,520 $13,500 $5,760 $14,200 $12,280

A firm is considering moving from the United States to Mexico. The firm pays its U.S. workers $30.00 per hour. Currently, U.S. workers have a marginal product of 45 units, whereas Mexican workers have a marginal product of 9 units. In order for the firm to reduce its wage cost per unit of output by moving to Mexico, the wages in Mexico must be below_________per hour.

Assume that a speculator purchases a put option on British pounds (with a strike price of $1.50) for $0.05 per unit. A pound option represents 31,250 units. Assume that at the time of the purchase, the spot rate of the pound is $1.51 and continually rises to $1.62 by the expiration date. The highest net profit possible for the speculator based on the information above is: Group of answer choices $1,562.50 -$1,250.00 -$625.00 -$1,562.50

Theo owns 51% and Lucy owns 49% of Candy Corporation’s stock. Theo and Lucy are unrelated. One year before the complete liquidation of Candy Corporation, Theo transfers land (basis of $210,000, fair market value of $140,000) to Candy Corporation as a §351 contribution. Assume that Theo also contributed other property in the same transaction having a basis of $20,000 and fair market value of $120,000. In liquidation, Candy Corporation distributes the land to Lucy. At the time of the liquidation, the land is worth $130,000. How much loss, if any, will Candy Corporation recognize with respect to the distribution of the land?

Problem 2-15 (Algorithmic) Life Insurance (LO 2.8) Sharon transfers to Russ a life insurance policy with a cash surrender value of $24,800 and a face value of $74,400 in exchange for real estate. Russ continues to pay the premiums on the policy until Sharon dies 7 years later. At that time, Russ has paid $11,160 in premiums, and he collects the $74,400 face value. How much of the proceeds, if any, is taxable to Russ

Warrants exercisable at $15 each to obtain 81000 shares of common stock were outstanding during a period when the average market price of the common stock was $20. Application of the treasury stock method for the assumed exercise of these warrants in computing diluted earnings per share will increase the weighted average number of outstanding shares by:_________

a. 20250.
b. 81000.
c. 27000.
d. 60750.