Assignment ER Exercise 1421 Presented below is selected fina

Assignment ER Exercise 14-21 Presented below is selected financial information for two divisions of Samberg Brewing. Supply the missing information for the lettered items. Lite Lager $310,000 Contribution margin Controllable margin Average operating assets Minimum rate of return Return on investment $484,000 198,400 (a) $1,296,000 % (b) 11 % 16 % % (d) Residual income $99,200 $220,320 Click if you would like to Show Work for this question: Open Show Work Question Attempts: 0 of 1 used 30 2 3 5

Solution

Lager:-

a.

Return on Investment = [Controllable margin / Average operating assets ] x 100

16%=[198400/Average operating asset]*100

Average operating assets=198400/16%=$12,40,000

b.

Residual Income = Controllable margin – [Average operating assets x Minimum rate of return ]

99200=198400-[1240,000* Minimum rate of return]

198400-99200=1240,000*Return

Minimum Return=99200/1240,000

=8%

Lite Lager

c.

Residual Income = Controllable margin – [Average operating assets x Minimum rate of return ]

220,320=Controllable margin-[1296000*11%]

Controllable Margin=220,320+142,560

=362,880

d.

Return on Investment = [Controllable margin / Average operating assets ] x 100

=362880/1296000

=28%