Hargrave Products Has Three Divisions Which Operate Autonomously

question 106

Essay

Hargrave Products has three divisions which operate autonomously.Their results for the current year were as follows:

The company's desired rate of return is 15 percent.
Required:
a.Compute each division's ROI.Round to three decimal places.
b.Compute each division's residual income.
c.Rank each division by both ROI and residual income.

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Definitions:

Variances

The difference between planned or expected financial outcomes and the actual results, often analyzed in budgeting and cost management.

Performance Reports

Documents that compare actual work performance against planned or expected outcomes.

Variable Cost

A cost that varies, in total, in direct proportion to changes in the level of activity. A variable cost is constant per unit.

Fixed Cost

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.