Mallory,Inc The Imputed Interest for Mallory,Inc

question 110

Essay

Mallory,Inc.has the following data available for two of its divisions for last year: $$\begin{array} { | l | r | r | } \hline & \begin{array} { r } \text { Asian } \\\text { Division }\end{array} & \begin{array} { r } \text { European } \\\text { Dirision }\end{array} \\\hline \text { Sales } & \$ 460,000 & \$ 900,000 \\\hline \text { Contribution Margin } & 184,000 & 470,000 \\\hline \text { Operating income } & 92,000 & 90,000 \\\hline \text { Average operating assets } & 368,000 & 750,000 \\\hline \text { Weighted average cost of } & 14 \% & 14 \% \\\text { capital } & \\\hline\end{array}$$
The imputed interest for Mallory,Inc.is 24%.The tax rate for Mallory,Inc.is 18%.Required:
(1)Compute the following for each division:
(a)Sales margin.(b)Capital turnover.(c)ROI.(d)Residual income.(e)EVA (assume there are no current liabilities).(2)Briefly discuss which division appears most successful and why?

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Definitions:

Remembered

Pertains to information or experiences that have been stored in memory and can be retrieved.

Prefrontal Cortex

The part of the brain located at the front of the frontal lobes, involved in complex behaviors such as decision making, planning, and moderating social behavior.

Overconfidence

An overly positive judgment of one’s own decision-making abilities and performance.

Participant Confidence

The level of belief individuals have in their own abilities and judgments during participation in an activity or research.