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StormLrd StormLrd
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6 years ago
Consolidated Gas Supply Corporation uses the investment center concept for the gasoline stations that it manages in the city. Consolidated has a 15% required rate of return on investment in order for a branch station to be viable. Select operating data for three of its stations for the current year are as follows:

   Maple Street   Oak Street   Hickory Street
Revenue   $17,000,000   $13,500,000   $15,000,000
Operating assets   7,000,000   7,000,000   5,000,000
Current liabilities   300,000   250,000   360,000
Net operating income   960,000   1,150,000   910,000

Required:
a.   Compute the return on investment for each station.
b.   Which station manager is doing best based only on ROI?
c.   Are any of the stations under performing?
d.   Should the required rate of return be the same for each station if the business risks are different? Explain.
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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btpsandbtpsand
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StormLrd Author
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6 years ago
Helped a lot
sleinhi
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Yesterday
This helped my grade so much Perfect
Fanmkreyol
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2 hours ago
Good timing, thanks!
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