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 a present an argument for why translation exposure is

1 .(a) Present an argument for why translation exposure is relevant to an MNC. (b) Present an argument for why translation exposure is not relevant to an MNC. 2 .Walt Disney Inc built the EuroDisney theme park in France ...

The yield on zero-coupon bonds are as followsus yen 1

The yield on zero-coupon bonds are as follows: U.S.$ % Yen % 1 year    3.00       5.00 2 years   3.50       6.00 A young investment banker considers issuing a bond for ¥100 million. The interest or coupon is paid on year ...

1 in addition to the key words that were defined in the

1. In addition to the key words that were defined in the text, you should be able to define the following terms, which also appear in the Glossary: replication pseudoscience 2. Describe one way in which understanding res ...

El dorado storage has the following projections for year 1

El Dorado Storage has the following projections for Year 1 of a capital budgeting project. Sales: $128,226 Fixed costs and selling, general and administrative expenses $12,951 Depreciation Expense $26,260 Tax Rate 35% Ca ...

1 what is counterparty risk what counterparty risk is

1. What is counterparty risk? What counterparty risk is involved with forward contracts? Why are investors and firms that enter forward contracts willing to accept counterparty risk? 2. What are the key differences betwe ...

1 illustrate a common trade-off that occurs between the

1. Illustrate a common trade-off that occurs between the work areas of logistics. 2. Discuss and elaborate on the following statement: "The selection of a superior location network can create substantial competitive adva ...

1 name the four major classes of mortgage-related

1. Name the four major classes of mortgage-related securities. As an issuer, explain the reasons for choosing one type over another. 2. What is the major difference between a CMO and the other types of mortgage-related s ...

Discussionmiddot determine a key difference between

Discussion · Determine a key difference between a fee-for-service plan and an episode of care payment plan, and indicate the plan that you believe to be most advantageous for the majority of patients. Provide support for ...

Problem -the balance sheet of perseverance corporation on

Problem - The balance sheet of PERSEVERANCE CORPORATION on December 31, 2005, includes the following cash and receivable balances: Cash - Davao Bank   P 45,000 Currency and coins   16,000 Petty cash fund   1,000 Cash in ...

1 name two different ways that mptbs can be

1. Name two different ways that MPTBs can be overcollateralized. 2. What is a CMO? Explain why a CMO has been called as much of a marketing innovation as a financial innovation. 3. What is meant by a derivative investmen ...

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen