The Following Information Is Given for the Corn and Oats

question 38

Essay

The following information is given for the Corn and Oats Divisions of Wholesome Grains Corporation.

	Corn	Oats
Sales	$600,000	$300,000
Var. cost of goods sold	200,000	150,000
Fixed manufacturing costs	50,000	40,000
Variable selling	30,000	5,000
Fixed selling (50% allocated)	20,000	4,000
Fixed selling (20% allocated)	50,000	30,000
Assets at book value	600,000	500,000

a. If Wholesome Grains Corporation uses income to evaluate division managers, compute net income that should be used for that purpost given the limited data above.
b. If Wholesome Grains Corporation uses ROI to evaluate division managers and uses historical cost as the investment base, compute the ROI for the Corn and Oats divisions.

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Definitions:

Principal

The primary party to a transaction or contract who has authorized another (agent) to act on their behalf or the main amount of debt before interest.

Constructive Notice

A legal fiction that signifies a person or entity should have known, as a reasonable person would have, even if they have no actual knowledge of it.

Apparent Authority

A principle that allows a third party to assume an agent has the authorization to act on behalf of a principal, even if such authority has not been granted.

Constructive Notice

A legal concept assuming that a person or entity is aware of facts by virtue of the information being publicly available, regardless of whether they have actually reviewed the information.