Presented below is selected financial information for two divisions of Samberg B
ID: 2521545 • Letter: P
Question
Presented below is selected financial information for two divisions of Samberg Brewing.
Supply the missing information for the lettered items. (Round minimum rate of return and ROI to 1 decimal place, e.g. 10.5% and round average operating assets to 0 decimal places e.g. 58,971.)
Lager
Lite Lager
$500,700
$299,500
200,700
$1,199,000
13
21
$99,300
$204,800
Lager
Lite Lager
Contribution margin$500,700
$299,500
Controllable margin200,700
(c) Average operating assets $ (a)$1,199,000
Minimum rate of return % (b)13
% Return on investment21
% % (d) Residual income$99,300
$204,800
Explanation / Answer
Lager West Contribution Margin 500700 299500 Controllable Margin 200700 360670 C Average Operating Assets 955714 A 1199000 Minimum Rate of Return 10.6% B 13% Return on Investment 21% 30.1% D Residual Income 99300 204800 Finding A: Finding C: Return on Investment 21% Residual Income 204800 Controllable Margin/Av Operating Assets 21% Controllable Margin-Desired Mini Return 204800 200700/Av Operating Assets 21% Controllable Margin-(Av. Operating Assets*Minim Return) 204800 Average Operating Assets 200700/21% Controllable Margin-(1199000*13%) 204800 Average Operating Assets 955714 Controllable Margin-(155870) 204800 Controllable Margin 204800+155870 Finding B: Controllable Margin 360670 Residual Income 99300 Controllable Margin-Desired Mini Return 99300 Finding D: (200700-Desired Mini Return) 99300 Return on Investment Desired Minimum Return 200700-99300 Controllable Margin/Av Operating Assets Desired Minimum Return 101400 360670/1199000*100 Average Operating Assets 955714 30.1% Minimum Rate of Return 10.6% (Desired Min Return/Average Operating Assets) (101400/955714*100)