Managerial Acoounting - Spreadsheet Practice

Questions***From Managerial Accounting by Needles and Crosson.

Alexandra Patel, the manager of the food and Lodging division at Winter
Wonderland, has hired you as a consultant to help her examine her
division’s performance under several different circumstances.

1. Type the following format into a spread sheet to compute the Food and
Lodging Divisions’s actual return on investment and residual income.
Match your data entry to the rows and column shown below. Review
Problem. (Hint: When entering the formulas, type = in front of the
formula in the cell. Then the spreadsheet will know to compute the
answer. Remember to format each cell for the type of numbers it holds,
such as percentage, currency, or general.)

Investment Center

Sales

Operating income Average assets invested Desired ROI

Return on Investment Profit Margin Asset Turnover Residual Income

Food and Lodging Division Actual Results

$40,000,000

$ 6,450,000

$10,000,000

30%

D5/D6 D5/D4 D4/D6

D5-(D7*D6)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16





2. Patel would like to know how the figures would change if Food and
Lodging desired ROI of 40 percent and average assets invested of
$10,000,000. Revise your spreadsheet from 1 to compute the division's
return on investment and residual income under those conditions.

3. Patel also wants to know how the figures would change if Food and
Lodging had a desired ROI of 30 percent and average assets invested of
$12,000,000. Revise your spreadsheet from 1 to compute the division's
return on investment and residual income under those conditions.

4. Does the use of formatted spreadsheets simplify the computation of
ROI and residual income? Do such spreadsheets make it easier to do
"what-if" analyses?