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Author Question: Nobles Corporation provided the following segment margin income statement for two of its divisions: ... (Read 55 times)

olsonmanny@gmail.com

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Nobles Corporation provided the following segment margin income statement for two of its divisions: East and West.

EastWestTotal
Revenue$510,000$480,000$990,000
Variable expenses
  Product370,000 260,000630,000
  Selling and administrative   80,000    88,000 168,000
Contribution margin60,000 132,000192,000
Less traceable fixed costs   20,000    40,000   60,000
Segment margin$  40,000$  92,000132,000
Common fixed costs 140,000
Net operating income($   8,000)

Nobles' actual weighted-average cost of capital is 10% and its tax rate is 30%. The East division balance sheet showed $300,000 of assets ($60,000 current and $240,000 long-term) and $320,000 of liabilities ($120,000 current and $200,000 long-term). The West division reported $360,000 of assets ($80,000 current and $280,000 long-term) and $260,000 of liabilities ($60,000 current and $200,000 long-term).

Required:

a.Calculate the economic value added for each division.
b.Which of the two managers will be rated higher on performance? Why?


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Marked as best answer by olsonmanny@gmail.com on Feb 5, 2023

MistyHubbard

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olsonmanny@gmail.com

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Reply 2 on: Feb 5, 2023
Great answer, keep it coming :)


skipfourms123

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Reply 3 on: Yesterday
Gracias!

 

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