【正文】 –8 1. The parable uncontrolled price method should be used because a market price exists. Market price ....................... $ Plus shipping, duties .......... Less marketing costs ......... ( ) Transfer price .............. $ 2. The costplus method should be used because a market price does not exist, and the . division is not going to resell the paint. Manufacturing cost ............ $ Plus shipping, duties .......... Transfer price .............. $ 10–9 1. The resale price method should be used because a market price does not exist and the paint will be resold and not used in further manufacturing. 2. Resale price = Transfer price +( Transfer price) $18 = Transfer price Transfer price = $18/ = $12 10–10 1. PacificRim: $126,000 – ( $900,000) = $18,000 European: $1,350,000 – ( $9,000,000) = $270,000 Residual ine is an absolute dollar measure, so it does not adjust for the relative sizes of the divisions. 2. PacificRim: $18,000/$900,000 = 2% European: $270,000/$9,000,000 = 3% It is now possible to say the European Division is relatively more profitable than the PacificRim Division. 3. PacificRim: $126,000/$900,000 = 14% European: $1,350,000/$9,000,000 = 15% 219 ROI can be used to pare relative divisional profitability. 10–10 Concluded 4. PacificRim: 2% + 12% = 14% European: 3% + 12% = 15% The residual rate of return and the required rate of return will always sum to the ROI. 10–11 1. A B C D Revenue ............. $10,000 $48,000 $96,000 $19,200* Expenses ........... $8,000 $36,000* $90,000 $18,000* Net Ine ......... $2,000 $12,000 $6,000* $1,200* Assets ................ $40,000 $96,000* $48,000 $9,600 Margin ................ 20%* 25% %* % Turnover ............ * 2* 2 ROI ..................... 5%* %* %* %* *Indicates calculated amounts. 2. A’s residual ine = $2,000 – ( $40,000) = ($1,600) B’s residual ine = $12,000 – ( $96,000) = $3,360 C’s residual ine = $6,000 – ( $48,000) = $1,680 D’s residual ine = $1,200 – ( $9,600) = $336 10–12 1. Net ine = $1,000,000 – $600,000 – $100,000 = $300,000 Residual ine = $300,000 – ()($1,500,000) = $75,000 2. ROI = $300,000/$1,500,000 = , or 20% 220 10–13 If Casey accepts the new position, she will earn $56,000 (salary of $40,000 and bonus of $16,000) in Year 1. After two years, if Litton’s stock rises at the same rate as it has over the past five years, she will be able to exercise her stock option and realize a gain of the following: Price of stock in two years ($12 10,000).............. $ 158,700 Exercise price of stock ............................................................... 120,000 Gain...................................................................................... $ 38,700 Casey will clearly be better off financially right away. Her salary plus bonus with Litton is $1,000 higher than her current salary. In addition, if the increase in ine for the Financial Services Division can be sustained, she stands to make considerably more through bonuses in the ing years. The stock option, exercisable in two years, also gives Casey the potential to make another $38,700. On the down side, Casey’s current salary is reasonably secure. The Litton position has a lower guaranteed salary and the risk of bonuses and option values which may not be realized. If the financial services industry experiences a downturn, Casey will suffer no matter how well she personally performs. The final decision rests on Casey’s assessment of the risk versus reward of the two positions. She should also consider the risk of remaining in her present position。 or $135 if labor is considered fixed (see answer to Requirement 3). 3. The environmental factor most important to this decision is the governmental prohibition against layoffs. This could turn direct labor into a strictly fixed cost. This particular prohibition is a serious one. 229 Some Spanish plants have been virtually closed for years, yet the firms must continue to pay the workers since the government has refused permission to lay off the workers. 10–21 1. Fred turned down the proposed investment as the ROI from the investment is 13% ($156,000/$1,200,000) pared to the current ROI of 16% ($2,560,000/$16,000,000). If the iron is produced, then the division’s ROI would decrease to % ($2,716,000/$17,200,000). 2. The iron should have been manufactured since the pany’s ine would increase $48,000 [$156,000 – (9% $1,200,000)]. 3. Yes. The project has a residual ine of $48,000 and accepting it would have increased the division’s residual ine. 4. Residual ine encourages managers to invest in projects that increase a firm’s ine, decreasing the likelihood that profitable investments will be turned down. ROI encourages managers to select those investments that provide the greatest return per dollar invested. ROI provides a relative mea sure of performance, making parisons among divisions possible. 5. Since ROI is the main performance measure, Fred was not willing to accept a profitable investment because it would decrease hi