DVU Segment Margin Questions

Description

1. Assume a company has two divisions, A and B. The company’s overall sales, overall contribution margin ratio, common fixed expenses, and net operating income are $500,000, 48%, $50,000, and $10,000, respectively. If Division B has a segment margin of $(20,000), then what is the segment margin for Division A?

2. Assume a company reported the following results:

Sales$ 400,000Variable expenses260,000Contribution margin140,000Fixed expenses40,000Net operating income$ 100,000Average operating assets$ 650,000

The turnover is closest to:

3. Assume a company reported the following results:

Sales$ 400,000Variable expenses260,000Contribution margin140,000Fixed expenses40,000Net operating income$ 100,000Average operating assets$ 500,000
If the company’s minimum required rate of return on average operating assets is 16%, its residual income would be:

——————

4.Which of the following measures would most likely appear in the Financial perspective of a company’s balanced scorecard? a. return on asset b.customer defection rate c. delivery cycle time d average training hours per employee

5. Assume that a company has decided to include “overall equipment effectiveness” and “percent of customer complaints settled on first contact” as performance measures within its balance scorecard. Which of the following choices reflects management’s most likely expectations regarding how these measures should change over time?

Overall equipment effectivenessPercent of customer complaints settled on first contactA)IncreaseIncreaseB)IncreaseDecreaseC)DecreaseIncreaseD)DecreaseDecrease

6.Gabbe Industries is a division of a major corporation. Last year the division had total sales of $24,040,500, net operating income of $3,726,278, and average operating assets of $7,755,000. The company’s minimum required rate of return is 18%.

Required:

a. What is the division’s margin? (Round your percentage answer to 2 decimal places.)

b. What is the division’s turnover? (Round your answer to 2 decimal places.)

c. What is the division’s return on investment (ROI)? (Round percentage your answer to 2 decimal places.)

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