Required Information [The following information applies to the questions displayed below.] Megamart provides the following Information on its two Investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should the new Investment opportunity be accepted? The target return is 12% Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Numerator: Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income Investment Center Return on Investment Required 1 Required 2 Required 3 Income $ 3,173,000 2,286,000 Electronics Sporting Goods Which center is most efficient at using assets to generate income? /Denominator: 1 1 1 Required 1 Required 1 Required 2 Required 3 Electronics Average Assets $ 16,700,000 12,700,000 Residual income Which center generated the most residual income? Assume a target income of 12% of average assets. Compute residual income for each center. Which center generated the most residual income? < Required 1 = Return on Investment Sporting Goods = Required 2 > Required 3 > Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 12%.
Required Information [The following information applies to the questions displayed below.] Megamart provides the following Information on its two Investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should the new Investment opportunity be accepted? The target return is 12% Required 1 Required 2 Required 3 Complete this question by entering your answers in the tabs below. Numerator: Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income Investment Center Return on Investment Required 1 Required 2 Required 3 Income $ 3,173,000 2,286,000 Electronics Sporting Goods Which center is most efficient at using assets to generate income? /Denominator: 1 1 1 Required 1 Required 1 Required 2 Required 3 Electronics Average Assets $ 16,700,000 12,700,000 Residual income Which center generated the most residual income? Assume a target income of 12% of average assets. Compute residual income for each center. Which center generated the most residual income? < Required 1 = Return on Investment Sporting Goods = Required 2 > Required 3 > Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 12%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Required Information
[The following Information applies to the questions displayed below.]
Megamart provides the following Information on its two Investment centers.
Investment Center
Electronics
Sporting goods
Sales
$ 63,460,000
19,050,000
1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to
generate Income?
2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most
residual Income?
3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should
the new Investment opportunity be accepted? The target return is 12%.
Complete this question by entering your answers in the tabs below.
Numerator:
Required 1 Required 2 Required 3
Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to
generate income?
Income
$ 3,173,000
2,286,000
Income
Investment Center
Return on Investment
Electronics
Sporting Goods
Which center is most efficient at using assets to generate income?
Required 1 Required 2 Required 3
/ Denominator.
1
XPequered 1
Average Assets
$ 16,700,000
12,700,000
Electronics
Assume a target income of 12% of average assets. Compute residual income for each center. Which center generated the
most residual income?
Residual income
Which center generated the most residual income?
< Required 1
Sporting Goods
Return on Investment
Required 2 >
< Required 2
Required 3 >
Required 1 Required 2 Required 3
Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment.
Should the new investment opportunity be accepted? The target return is 12%.
Should the new investment opportunity be accepted?
Required 3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4a64f698-7480-45b7-b396-278502449dea%2F7a7b52d4-985e-4a26-bb61-415be1ecd742%2Fbzulwkq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required Information
[The following Information applies to the questions displayed below.]
Megamart provides the following Information on its two Investment centers.
Investment Center
Electronics
Sporting goods
Sales
$ 63,460,000
19,050,000
1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to
generate Income?
2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most
residual Income?
3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should
the new Investment opportunity be accepted? The target return is 12%.
Complete this question by entering your answers in the tabs below.
Numerator:
Required 1 Required 2 Required 3
Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to
generate income?
Income
$ 3,173,000
2,286,000
Income
Investment Center
Return on Investment
Electronics
Sporting Goods
Which center is most efficient at using assets to generate income?
Required 1 Required 2 Required 3
/ Denominator.
1
XPequered 1
Average Assets
$ 16,700,000
12,700,000
Electronics
Assume a target income of 12% of average assets. Compute residual income for each center. Which center generated the
most residual income?
Residual income
Which center generated the most residual income?
< Required 1
Sporting Goods
Return on Investment
Required 2 >
< Required 2
Required 3 >
Required 1 Required 2 Required 3
Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment.
Should the new investment opportunity be accepted? The target return is 12%.
Should the new investment opportunity be accepted?
Required 3
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education