Becky's Bikes Inc

question 35

Essay

Becky's Bikes Inc.has two divisions: Retail and Service.The following information is for each division at Becky's Bikes for the most recent fiscal year.

To calculate EVA,management requires adjustments for marketing and non-interest bearing current liabilities as outlined below.
Marketing will be capitalized and amortized over several years resulting in an increase to average operating assets of $50,000 for the Retail division and $32,500 for the Services division.On the income statement,marketing expense for the year will be added back to operating income,then marketing amortization expense for one year will be deducted.The current year amortization expense will total $30,000 for the Retail division and $20,000 for the Services division.
Non-interest bearing liabilities will be deducted from average operating assets.
Calculate economic value added (EVA)for each division and comment on your results.

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Definitions:

Secret Vote

A voting method in which voters choose in privacy without disclosing their selection to others, ensuring confidentiality and preventing influence.

Simple Regression

A statistical method for modeling the relationship between a single independent variable and a dependent variable.

Dependent Variable

The variable in a study or model that is affected by changes in other variables (independent variables), often representing the outcome or effect being investigated.

Independent Variable

An element or factor in an experiment that is manipulated or changed to observe its effects on the dependent variable.