Albrecht 19.pdf - Marriott School

76154_23_ch19_p942-1006.qxd 3/1/07 3:35 PM Page 997
EOC | Controlling Cost, Profit, and Investment Centers Chapter 19 997
At the first of the year, Family Friendly Photography created a budget of expectations for the
first year of business. Following are the expectations for the first year of business:
Number of
Photo Shoots
Price per
Photo Shoot
Groups of 15+ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 $275.00
Groups of 2–15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 200.00
Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 115.00
Required:
Compute the sales price variance and the sales volume variance for each of the three groups
listed above.
P 19-56
LO3, LO4
ROI and Contribution-Margin Analysis
Macro Data Corporation’s three divisions had the following operating data during 2009:
Fax Machine Calculator Computer
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000 $150,000 $200,000
Variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 90,000 135,000
Fixed costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000 56,000 53,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 38,000 120,000
Required:
1. Compute the contribution margin for each division.
2. Compute the segment margin for each division (assume that all fixed costs are direct to
each division).
3. Compute the ROI for each division.
4. Which division had the highest profit margin ratio
5. Interpretive Question: Which division had the best performance in 2009 Why
P 19-57
LO4
ROI
Frank’s Fixtures has two divisions: the Plumbing Division and the Electrical Division.
Following are their operating data for 2009:
Plumbing
Division
Electrical
Division
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $150,000 $180,000
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 16,200
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000 72,000
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,000 20,800
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,500 26,000
Required:
1. Calculate the ROI for each division.
2. Interpretive Question: On the basis of this return, which division appears to have the
better performance Why
P 19-58
LO4
ROI
The following information for 2009 applies to the two sales divisions of Ward Enterprises:
Joliet
Wheaton
Total inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $75,000 $60,000
Profit margin ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12% 15%
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,000 $18,000
(continued)