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Suppan Company 2014

Price: $2.50

Suppan Company manufactures a variety of tools and industrial equipment. The
company operates through three divisions. Each division is an investment center. Operating
data for the Home Division for the year ended December 31, 2014, and relevant budget
data are as follows.
Average operating assets for the year for the Home Division were $2,000,000 which was
also the budgeted amount.

(a) Prepare a responsibility reportfor the Home Division.
(b) Compute the expected ROI in 2014 for the Home Division, assuming the following
independent changes to actual data.
(1) Variable cost of goods sold is decreased by 5%.
(2) Average operating assets are decreased by 10%.
(3) Sales are increased by $200,000, and this increase is expected to increase contribution
margin by $85,000.

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