Problem 4: Performance Measurement (NEW Problem INFORMATION!!)
Weather Accessories, Inc., has four divisions-Winter, Spring, Summer and Fall. The company is looking into the performa
of each investment centers. Calculate the Return on Investment and Residual Income for each division and explain the rest
(CLEARLY SHOW AND LABEL ALL CALCULATIONS).
2
Winter
Spring
Summer
Fall
3
Sales $217,900
$249,800
$271,400
$289,400
4
Net Income
$78,310
$148,380
$140,570
$107,380
5
6
Avg Operating Assets (investment) $793,600
$791,300
$827,300
$845,400
7
8
-9 a. Calculate the Return on Investment (ROI) for each division.
0
Winter
Spring
Summer
Fall
#1 Return on Investment
2
43
44
45
46
47
48 b. Calculate the Residual Income for each division if the cost of capital is 11%
49
50
51
52
53
54
55
Winter
Spring
Summer
Fall
c. Which division is doing the best? Explain using your data and be sure to explain the meaning of Return on Investment and
56 Residual Income.
57
58
59
60
61
62
Budget Project Results
63
Points Possible
Points Earned
Percentage
264 Master Budgets
30
0
0%
265 Cash Budget
20
0
0%
266 Flexible Budget
20
0
0%
267 Variance Analysis
20
0
0%
268 Investment Center Analysis
10
0
0%
269
TOTALS
100
0
Project
Settings