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SirJohnny SirJohnny
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A year ago
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?
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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fnc28304fnc28304
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A year ago
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