For 2012, Division a of Peoria Company Reported Operating Assets

question 106

Essay

For 2012, Division A of Peoria Company reported operating assets of $8,500,000, revenues of $6,800,000, and operating expenses of $5,760,000. The company has established a target return on investment (ROI) of 14% for the division.
Required:
a) Calculate the 2012 ROI for the division. Did the division achieve its target ROI for the year?
b) For 2013, Division A managers expect that its operating assets will stay at about the same level as for 2012. Variable expenses for 2012 were $4,080,000, and the remaining expenses were fixed. The managers expect that the contribution margin ratio for 2013 will be the same as for 2012 and that the amount of fixed expenses will not change. To what level must sales increase in 2013 to achieve the target ROI?

Understand the significance of employee benefits, retirement benefits, and post-retirement benefits from an employer’s accounting perspective.

Appreciate the role and responsibilities of the treasurer's department in the context of payroll processing.

Understand the concept and implications of opportunity cost.

Describe factors contributing to the standard of living differences between countries.

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Definitions:

Monopsonistic Labor Market

A market condition where there is only one buyer (employer) for many sellers of labor, giving the buyer significant control over wages and employment conditions.

Upsloping Labor Supply Curve

A graphical representation showing an increase in the quantity of labor supplied as wages rise, under the assumption that higher wages incentivize more work effort.

Player Drafts

A process used in professional sports leagues for teams to select eligible players to join their rosters, often based on a system that aims to maintain competitive balance.

Professional Athletes

Individuals who earn a living through competing in sports where they receive payment for their performance and achievements.