Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Drawem Company purchased Bildem Company three years ago. Prior to the acquisition, Bildem manufactured and sold electronic products to third-part customers. Since becoming a division of Drawem, Bildem now manufactures electronic components only for products made by Drawem's Macon Division.
Drawem's corporate management fives the Bildem Division management considerable latitude in running the division's operations. However, corporate management retains authority for decisions regarding capital investments, product pricing, and production quantities.
Drawem has a formal performance evaluation program for all divisional management teams that relies substantially on each division's ROI. Bildem division's income statement provides the basis for the evaluation of its divisional management (See the following income statement)
The corporate accounting staff prepares the decision's financial statements. Corporate general services costs are allocated on the basis of sales dollars, and the computer department's actual cost are apportioned among the divisions on the basis of use. The net division investment includes division fixed assets at net book value (cost less depreciation), division inventory, and corporate working capital apportioned to the divisions on the basis of sales dollars

Required:
a. Discuss Drawem Company's financial reporting and performance evaluation program as it relates to the responsibilities of Bildem Division.

b. Based on the response to requirement (a), prepare a memo to management recommending appropriate revisions of the financial information and reports used to evaluate the performance of Bildem's divisional management. If revisions are not necessary, describe why.

DRAWEM COMPANY
Bildem Division
Income Statement
For the year Ended June 30
(in thousand)

Sales Revenue $8,000
Cost and expenses:
Product Cost:
Direct material $1,000
Direct labor 2,200
Manufacturing overhead 2,600
Total $5,800
Less: Increase in inventory 700 5,100
Engineering and research 240
Shipping and receiving 480
Division administration:
Manager's office $420
Cost management 80
Human services 164 664
Corporate cost:
General services $460
Computer 96 556
Total costs and expenses $7,040
Divisional operating profit $960
Net plant investment $3,200
Return on investment 30%

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M926603

Have any Question? 


Related Questions in Basic Finance

1 what are the major issues related to global tampd2 how

1. What are the major issues related to global T&D? 2. How can the effectiveness of global virtual teams be improved? 3. How can global leadership be developed? 4. How does one acquire a global mind-set? 5. What is the r ...

Vary emphasis in a memoassume that you have evaluated two

Vary emphasis in a memo. Assume that you have evaluated two candidates for the position of sales assistant. This is what you have learned: • Carl Barteolli has more sales experience. • Elizabeth Larson has more appropria ...

Enter the home page of the careers in business web site

Enter the home page of the Careers in Business Web site (http://www .careers-in-business.com), and page through the finance positions listed and their corresponding salaries. What skill sets or job characteristics lead t ...

You need a kidney replacement and thus you will be paying

You need a kidney replacement and thus you will be paying for it. The doctor offers you two options to pay: $40,000 in 4 years or $65,000 in 10 years. The current discount rate is 8%. Which payment option would you prefe ...

1 if 2 buys pound1 and 22 buys pound1 how many euros are

1. If $2 buys £1 and 2.2 buys £1, how many euros are required to buy $1? 2. A student makes the following observation: "During May 2010, the euro depreciated sharply against the U.S. dollar. That was good news for attend ...

1 what is the difference between moral hazard and adverse

1. What is the difference between moral hazard and adverse selection? How does each contribute to making information asymmetric? 2. Explain the "lemons problem." How does the lemons problem lead many firms to borrow from ...

1 discuss factors that must be considered for capital

1. Discuss factors that must be considered for capital budgeting for an MNC's foreign subsidiary that might not be considered for a domestic investment. 2. Consider investments in Brazil, Hungary, and Germany and discuss ...

Question 1 when viewing the terms special returns or

Question 1. When viewing the terms "special returns" or "abnormal returns," we know this can refer to _____. the Efficient Market Hypothesis gains in excess of the market risk-adjusted average convertibles and warrants, ...

In fig 911 is intermediate code to compute the dot product

In Fig. 9.11 is intermediate code to compute the dot product of two vectors A and B. Optimize this code by eliminating common subexpressions, performing reduction in strength on induction variables, and eliminating all t ...

If a company is deciding between two projects and can only

If a company is deciding between two projects, and can only select one of the two projects, what evaluation techniques should this company use in the analysis of these projects? When selecting capital projects and there ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro