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5. XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: ¹(Click the icon to view the information.) Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI? First enter the formula, then calculate each divisions residual income. (1) (2) Snow Non-Snow Interpret your results. Both divisions have (4) Are your results consistent with each division's ROI? This result is (6) 1: Data Table -( -( -( O Capital turnover O Current liabilities O Operating income with the ROI calculations. Xtreme's management has specified a target 15% rate of return. (1) O O Sales O Total assets x residual income. This means that the divisions are earning income at a rate that (5) (2) O X (3) Snow Sports Non-Snow Sports O Capital turnover O Current liabilities O Operating income %) = % ) = O Sales O Total assets Residual income $ $ Sales Operating Income 5,200,000 $ 8,000,000 $ (3) O management's minimum expectations. O Effective tax rate O Target rate of return O WACC Total Assets Current Liabilities 4,400,000 $ 6,500,000 $ 884,000 $ 1,360,000 $ 460,000 685,000 (4) O negative (5) O exceeds O positive ooo O is equal to O is lower than ROI 20.1% 20.9% (6) consistent O not consistent

5. XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: ¹(Click the icon to view the information.) Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI? First enter the formula, then calculate each divisions residual income. (1) (2) Snow Non-Snow Interpret your results. Both divisions have (4) Are your results consistent with each division's ROI? This result is (6) 1: Data Table -( -( -( O Capital turnover O Current liabilities O Operating income with the ROI calculations. Xtreme's management has specified a target 15% rate of return. (1) O O Sales O Total assets x residual income. This means that the divisions are earning income at a rate that (5) (2) O X (3) Snow Sports Non-Snow Sports O Capital turnover O Current liabilities O Operating income %) = % ) = O Sales O Total assets Residual income $ $ Sales Operating Income 5,200,000 $ 8,000,000 $ (3) O management's minimum expectations. O Effective tax rate O Target rate of return O WACC Total Assets Current Liabilities 4,400,000 $ 6,500,000 $ 884,000 $ 1,360,000 $ 460,000 685,000 (4) O negative (5) O exceeds O positive ooo O is equal to O is lower than ROI 20.1% 20.9% (6) consistent O not consistent

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 36P: Dantrell Palmer has just been appointed manager of Kirchner Glass Products Division. He has two...
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5. XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: ¹(Click the icon to view the information.) Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI? First enter the formula, then calculate each divisions residual income. (1) (2) Snow Non-Snow Interpret your results. This result is (6). 1: Data Table XTreme's management has specified a target 15% rate of return. (1) O with the ROI calculations. O Capital turnover O Current liabilities O Operating income Both divisions have (4) residual income. This means that the divisions are earning income at a rate that (5). Are your results consistent with each division's ROI? O Sales O Total assets x (2) O X (3) Snow Sports Non-Snow Sports O Capital turnover O Current liabilities O Operating income ) = %) = %) = O Sales O Total assets Residual income Operating Income 884,000 $ 1,360,000 $ Sales 5,200,000 $ $ $ 8,000,000 $ (3) O O Effective tax rate O Target rate of return O WACC management's minimum expectations. Total Assets Current Liabilities 4,400,000 $ 6,500,000 $ (4) O negative O positive 460,000 685,000 (5) O exceeds O is equal to O is lower than ROI 20.1% 20.9% (6) O consistent O not consistent
Transcribed Image Text:5. XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: ¹(Click the icon to view the information.) Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI? First enter the formula, then calculate each divisions residual income. (1) (2) Snow Non-Snow Interpret your results. This result is (6). 1: Data Table XTreme's management has specified a target 15% rate of return. (1) O with the ROI calculations. O Capital turnover O Current liabilities O Operating income Both divisions have (4) residual income. This means that the divisions are earning income at a rate that (5). Are your results consistent with each division's ROI? O Sales O Total assets x (2) O X (3) Snow Sports Non-Snow Sports O Capital turnover O Current liabilities O Operating income ) = %) = %) = O Sales O Total assets Residual income Operating Income 884,000 $ 1,360,000 $ Sales 5,200,000 $ $ $ 8,000,000 $ (3) O O Effective tax rate O Target rate of return O WACC management's minimum expectations. Total Assets Current Liabilities 4,400,000 $ 6,500,000 $ (4) O negative O positive 460,000 685,000 (5) O exceeds O is equal to O is lower than ROI 20.1% 20.9% (6) O consistent O not consistent
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