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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

The Following Information Is Given for the Corn and Oats