Nantucket Company Has Two Divisions That Report on a Decentralized

question 125

Essay

Nantucket Company has two divisions that report on a decentralized basis. Their results for 2018 were as follows: $\begin{array}{lrr}&\text { Helmet } &\text { Ball }\\ \text {Sales }&\$ 150,000 & \$ 300,000 \\ \text {Income }&\$ 15,000 & \$ 45,000 \\ \text {Asset base }&\$ 75,000 & \$ 150,000 \\ \text {Weighted average cost of capital }&12 \% & 12 \%\end{array}$
Required:
Compute the following amounts for each division:
a.Return on investment (ROI).
b.Residual income if the desired rate of return is 20 percent.
c.EVA.
d.Turnover.
e.Margin for each division.

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Definitions:

Temperament

The innate or genetically influenced traits that determine an individual's behavior, mood, and emotional responses.

Personality

The characteristic set of behaviors, thoughts, and emotional patterns that evolve from biological and environmental factors.

Gender-typing Theory

The process by which children learn the behaviors, interests, and abilities culturally associated with their gender, reinforcing societal norms.

Social Learning Theory

The theory that we learn social behavior by observing and imitating and by being rewarded or punished.