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?

Question

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?

Quizplus · Accepted Answer

The Answer of 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?

Mallory,Inc The Imputed Interest for Mallory,Inc