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									Chapter 19 Check Figures

19-26       No check figures
19-27       No check figures
19-28       2. Residual Income (RI), Mortgage Loans Division: @10% = $200; at 15% = $100; @ 20%
= $0
19-29        Company X: ROS = 10%; Asset Turnover = 2.5; ROI = 25%
19-30        1. Soap = 5.42%; Skin Lotion = 8.33%; Hair Products = 9.09%
             2. Soap = $250,000; Skin Lotion = $1,100,000; Hair Products =            $2,250,000
19-31        1. Eastern = 18.13%; Central = 19.34%; Western = 17.74%
             2. Eastern = $11,980; Central = $15,560; Western = $7,640
             3. Eastern = $39,392; Central = $37,360; Western = $14,300
19-32        1. 15.00% 2. 14.44%
19-33        1. Net benefit to the firm = $100,000; 3. Division A should buy          externally (benefit to
the firm = $100,000)
19-34        The firm is better off if Division A buys outside (net benefit =         $520,000)
19-35        1. $540               2. ROI: @ 2,000 units = 35%; @ 1,000 units = 5%
19-36        ROI (2010): for the firm, 13.8%; Southwest, 7.9%; Midwest =              29.7%; Southeast =
17.0%; Asset Turnover (2011): for the firm,        1.765; Southwest = 1.571; Midwest = 1.714; Southeast =
2.286
19-37        Return on Sales (ROS): North Atlantic = 2.34%; Mid Atlantic =            3.03%; Southeast =
6.60%; ROI, based on NBV: North Atlantic = 24.44%; Mid Atlantic = 15.21%; Southeast = 28.71%
19-38        Economic profit per employee (in 000s) = $2; productivity per            employee (in 000s) =
$26
19-39        2. $650 3. $500
19-40        1. ROI, based on NBV: Health Care = 12.15%; Cosmetics = 21.51% 2a. ROI, based on
gross book value, historical costs:        Health Care = 9.63%; Cosmetics = 14.81% 2c. ROI based on P-
L            adjusted NBV of fixed assets + book value of current assets: Health Care = 10.68%;
Cosmetics, 18.38% 2e. ROI, based on current liquidation value of fixed assets + book value of current
             assets: Health Care = 16.25%; Cosmetics = 15.38%
19-41        1a. 16.73% 1b. $985,714
19-42        1. Year 1 ROI = 11.11%; Year 2 ROI = 14.29%
             2. Year 1 ROI = 10.00%; Year 2 ROI = 10.00%
             4. Year 1 ROI, NBV and DDB = (12.50%); Year 2 ROI, NBV and DDB = 12.50%; Year 1
ROI, Gross Book Value and DDB =            (10.00%); Year 2, ROI, Gross Book Value and DDB = 6.00%
             5. Year 1, NBV and SL depreciation, RI = $10,000; Year 2, NBV            and SL depreciation, RI
= $30,000
19-43        2. ROI: Year 1 = 6.67%; Year 2 = 22.00%; Year 3 = 72.80%
             3. ROI: Year 1 = 20.00%; Year 2 = 20.00%; Year 3 = 20.00%
             4. Residual Incomes: Year 1 = $3,000; Year 2 = $2,400; Year 3 =          $1,440; NPV (@10%
discount rate) of Residual Incomes = NPV of        cash flows = $5,793
19-44        1. Residual Income (RI): Year 1 = $60,000; Year 2 = $76,000;             Year 3 = $92,000; NPV
of Residual Incomes (Years 1 through 5) =          $337,235; PV of cash flows: Year 0 = ($800,000); Year
1=           $272,727; Year 2 = $247,934; NPV of cash flows (Years 0 through 5) = $337,235
19-45        Division B’s manager should reject the proposal because it reduces                Division B’s
operating income by $275,000. The decision         of Division B to not sell inside is in the best interest of
the firm as a    whole (by $150,000).
19-46        1. $53       2. $925 3. ($46)
19-47        1. $53       2. $925 3. ($46)
19-48        1. $10.39          2a. 12.2%        2b. $2,577,500
19-49        No check figures
19-50        1. Correlation between ROI and Customer Retention Rate = 0.735; correlation between
Defect Rate and Customer Retention Rate =
             - 0.509
19-51        1. $900/unit 2. $900/unit to $1,250/unit
19-52        1. $120/unit 2. $152/unit
19-53        3a. $60      3b. $45    3c. $105     3d. $210
             4a. $30      4b. $90    4c. $ 35     4d. $155
19-54        No check figures
19-55        No check figures
19-56        Reduction in total income tax expense = $65,000
19-57        1. Appropriate transfer price = $205 per unit; 2. No change—the  correct transfer price is
still $205 per unit
19-58        2. RI: for JSC = $800,000; for RLI = $150,000; Combined = $950,000
19-59        1. Budgeted after-tax income, 2011 = $893,000; 2a. 17.27%
             2b. 2.197 2c. 37.93%
19-60        2. Total Contribution Margin: Mining Division = $15,200,000;
             Metals Division = $9,600,000 3. Range of transfer price: $85 -   $90 per unit
19-61        No check figures
19-62        1. No effect ($0) 2. Tax Savings = $8,000
19-63        No check figures
19-64        2. Relevant cost = $500 per barrel; a negotiated transfer price  would be between $500
and $550 per barrel
19-65        Return on Customer (ROC): Customer X = (33.33%); Customer Z = 120%
19-66        No check figures
19-67        No check figures

								
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