The following information relates to the operating performance of three divisions of Walmat Retail Corporation for last
Question:
Walmat evaluates divisional performance using rate of return on investment (ROI) after allocating a portion of the central corporate expenses to each division. Central corporate expenses for last year were $450,000.
a. Compute the ROI of each division before allocation of central corporate expenses.
b. Compute the ROI of each division assuming central corporate expenses are allocated based on divisional investments (that is, allocate 4/15 to the Miami Division, 5/15 to the Kansas City Division, and 6/15 to the Seattle Division).
c. Repeat part b., allocating central corporate expenses based on divisional sales.
d. Repeat part b., assuming that management allocates central corporate expenses based on the number ofemployees.
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil