Alpha and beta divisions of fraternity corporation

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Reference no: EM1319549

The following information is given for Alpha and Beta Divisions of Fraternity Corporation.

	Alpha	Beta
Sales	$600,000	$300,000
Var. cost of goods sold	200,000	150,000
Fixed manufacturing costs	50,000	40,000
Variable selling	30,000	5,000
Fixed admin. (50% allocated)	20,000	4,000
Fixed selling. (20% allocated)	50,000	30,000
Assets at cost	800,000	600,000
Accumulated depreciation	200,000	100,000

a. If Fraternity Corporation uses income to evaluate division managers, compute net income that should be used for that purpose given the limited data above.

b. If Fraternity Corporation uses ROI to evaluate division managers, and uses historical cost as the investment base, compute the ROI for Alpha and Beta.

Reference no: EM1319549

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