Stevens Company Has Two Divisions That Report on a Decentralized

question 34

Essay

Stevens Company has two divisions that report on a decentralized basis. Their results for 2011 were as follows: $\begin{array}{lcc}&\text { Helmet } & \text { Ball } \\\text { Sales } & £ 150,000 & £ 300,000 \\\text { Income } & £ 15,000 & £ 45,000 \\\text { Asset base } & £ 75,000 & £ 150,000 \\\text { Weighted average cost of capital } & 12 \% & 12 \%\end{array}$
a.Return on investment (ROI) if the desired rate of return is 12 per cent.
b.Residual income if the desired rate of return is 20 per cent.
c.EVA.
d.Turnover if the desired rate of return is 25 per cent.
e.Margin for each division if the desired rate of return is 10 per cent.

Understand the concept of comparative advantage and how it affects trade decisions.

Analyze the effects of trade on producer and consumer surplus.

Recognize the role of tariffs and their impact on trade.

Identify how international trade affects the economic well-being of a country.

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Definitions:

Explanation

The act of making something clear or understandable by describing or presenting it in detail.

Bad-News Message

A communication method used to convey unfortunate or unfavorable information in a tactful and sensitive manner.

Buffer

A protective barrier or amount of leeway that allows for the absorption of shocks, errors, or unforeseen circumstances in various contexts.

Identifies

The action of recognizing and naming someone or something as being a particular person or thing.