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the three divisions of monster foods are snack goods cereal and frozen foods the div 666111

The three divisions of Monster Foods are Snack Goods, Cereal, and Frozen Foods. The divisions are structured as investment centers. The following responsibility reports were prepared for the three divisions for the prior year:

 

Snack Goods

Cereal

Frozen Foods

Revenues

$1,050,000

$2,450,000

$ 875,000

Operating expenses

420,000

1,400,000

175,000

Income from operations before

 

 

 

service department charges

$ 630,000

$1,050,000

$ 700,000

Service department charges:

 

 

 

Promotion

$ 175,000

$ 350,000

$ 308,000

Legal

87,500

70,000

140,000

 

$262,500

$ 420,000

$ 448,000

Income from operations

$ 367,500

$ 630,000

$ 252,000

Invested assets

$2,100,000

$4,200,000

$1,260,000

1. Which division is making the best use of invested assets and thus should be given priority for future capital investments?

2. Assuming that the minimum acceptable rate of return on new projects is 12%, would all investments that produce a return in excess of 12% be accepted by the divisions?

3. Can you identify opportunities for improving the company’s financial performance?

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