PEMBAHASAN SOAL Problem 10.15 ROI, Residual Residual Income Income
Radding Raddington ton Industri Industries es produces produces tool and die machine machinery ry for manufac manufacture turers. rs. The company expanded vertically in 2009 by acquiring one of its suppliers of alloy steel plates, Reigis teel !ompan !ompany y. To manag managee the t"o t"o separ separat atee bus busine inesse sses, s, the the operat operatio ions ns of Reigi Reigiss are are report reported ed separately as an investment center. Raddington monitors its divisions on the basis of both unit contribution and return on average investment investment #R$I%, "ith investment investment defined as average operating operating assets employed. &anagement bonuses are determined on R$I. 'll investments in operating assets are e!ec"ed "o earn a minimum re"urn o# 11 !ercen" be#ore income "aes . Reig Reigis is((s cost cost of good goodss sold sold is cons consid ider ered ed to be enti entire rely ly vari variab able le,, "hil "hilee the the divi divisi sion on((s administrative expenses are not dependent on volume. elling expenses are a mixed cost "ith )0 percent attributed to sales volume. Reigis contemplated a capital acquisition "ith an estimated R$I of **.+ percent ho"ever, division management decided against the investment because it believed that the investment inv estment "ould decrease Reigis(s Reig is(s overall R$I. The 20*0 operating statement for Reigis follo"s. The division(s operating assets employed "ere -*+,+0,000 at /ovember 0, 20*0, a + percent increase over the 2009 year1end balance. Rei$is S"eel %om!an& O!era"in$ S"a"emen" 'or "(e )ear Ended No*ember +0, 010 -in "(ousands
ales revenue ess expenses3 !ost of goods sold 'dministrative expenses elling expenses $perating income before income taxes
-2+,000 -*4,+00 - ,9++ - 2,00
- 2 , *+ + - * ,5 ) +
Required3 *. !alculate the unit contribution for Reigis teel !ompany if *,)5),000 units "ere produced and sold during the year ended /ovember 0, 20*0. 2. !alculate the follo"ing performance measures for 20*0 for Reigis teel !ompany3 a. 6retax return on average investment in operating assets employed #R$I%. b. Residual income calculated calcula ted on the basis of average aver age operating assets employed. . 7xplain "hy the management of Reigis teel !ompany "ould have been more li8ely to accept the contemplated capital acquisition if residual income rather than R$I "ere used as a performance measure.
). Reigis teel !ompany is a separate investment center "ithin Raddington Industries. Identify several items that Reigis should control if it is to be evaluated fairly by either the R$I or residual income performance measures. 6enyelesaian *. Reigis teel !ompany nit !ontribution &argin #in thousands% :or the ;ear 7nded /ovember 0, 20*0 ales......................................................................... ess variable costs3 !ost of goods sold............................................ elling expenses #-2,00 < )0=%.................... !ontribution margin................................................. nit contribution margin
2.
a.
-2+,000 -*4,+00 *,050
-*,+50 - ,)20
> -,)20,000?*,)5),000 units > -+.00 per unit
R$I > $perating Income before taxes?'verage operating assets@ > -*,5)+,000?-*+,+,000 > *2= @'verage operating assets
> #-*+,+0,000 A *+,000,000%?2 > -*+,+,000 Bhere /ovember 0, 2009 operating assets > -*+,+0,000?*.0+
b.
Residual income
> operating income C #minimum rate of return < operating asset% > -*,5)+,000 C #0.** < -*+,+,000% > -*,5)+,000 C -*,49*,2+0 > -*+,+0
.
&anaDemen Reigis teel a8an lebih mung8in untu8 menerima a8uisisi modal tersebut Di8a mengguna8an residual income sebagai u8uran 8inerDa 8arena investasi a8an mening8at devisi residual income dan bonus manaDemen . Eengan mengguna8an residual income, manaDemen a8an menerima semua investasi dengan return yang lebih tinggi dari **= sebagai investasi 8arena a8an mening8at8an nilai residual income1nya. Feti8a mengguna8an R$I sebagai u8uran 8inerDa, manaDemen Reigis a8an menola8 beberapa investasi di ba"ah R$I #*2=%, mes8ipun pengembaliannya lebih tinggi dari minimum rate of return yang diharap8an.
).
Reigis harus mampu mengendali8an semua item yang ber8aitan dengan 8euntungan dan investasi Di8a ingin dievaluasi sebagai pusat investasi bai8 dengan mengguna8an R$I maupun residual income sebagai u8uran 8inerDa. Reigis harus mengontrol seluruh elemen bisnis, 8ecuali biaya modal yang diinvestasi8an harus di8endali8an oleh Raddington Industries.
Problem 10. ROI, Residual Income, Be(a*ioral Issues
Gump tart !ompany #G!%, a subsidiary of &ason Industries, manufactures go1carts and other recreational vehicles. :amily recreational centers that feature go1cart trac8s along "ith miniature golf, batting cages, and arcade games have increased in popularity. 's a result, G! has been pressured by &ason management to diversify into some of these other recreational areas. Recrea"ional Leasin$, Inc. -RLI , one of the largest firms leasing arcade games to these family recreational centers, is loo8ing for a friendly buyer. &ason(s top management believes that RI(s assets could be acquired for an in*es"men" o# /+. million and has strongly ur$ed Bill rieco, di*ision mana$er o# S% , to consider acquiring RI. Hill has revie"ed RI(s financial statements "ith his controller, &arie Eonnelly, and they believe that the acquisition may not be in the best interest of G!. If "e decide not to do this, the &ason people are not going to be happy,J said Hill. If "e could convince them to base our bonuses on something other than return on investment, maybe this acquisition "ould loo8 more attractive. Ko" "ould "e do if the bonuses "ere based on residual income using the company(s 15 !ercen" cos" o# ca!i"al LJ &ason has traditionally evaluated all of its divisions on the basis o# re"urn on in*es"men" , "hich is defined as the ratio of operating income to total assets. The desired ra"e o# re"urn #or eac( di*ision is 0 !ercen". The management team of any division reporting an annual increase in the return on investment is automatically eligible for a bonus. The management of divisions reporting a decline in the return on investment must provide convincing explanations for the decline to be eligible for a bonus, and this bonus is limi"ed "o 50 !ercen" o# "(e bonus paid to divisions reporting an increase. The follo"ing condensed financial statements are for both G! and RI for the fiscal year ended &ay *, 2003 S% -/ RLI -/ ales revenue *0,+00,000 easing revenue 2,500,000 Mariable expenses #,000,000% #*,000,000% :ixed expenses #*,+00,000% #*,200,000% $perating income 2,000,000 400,000 !urrent assets 2,00,000 *,900,000 ong1term assets +,00,000 *,*00,000 2o"al asse"s 3,000,000 +,000,000 !urrent liabilities *,)00,000 5+0,000 ong1term liabilities ,500,000 *,200,000 toc8holders( equity 2,500,000 9+0,000 2o"al liabili"ies and s"oc4(olders e6ui"& 3,000,000 +,000,000 Required3 *. If &ason Industries continues to use return on investment as the sole measure of division performance, explain "hy G! "ould be reluctant to acquire RI. He sure to support your ans"er "ith appropriate calculations.
2. If &ason Industries could be persuaded to use residual income to measure the performance of G!, explain "hy G! "ould be more "illing to acquire RI. He sure to support your ans"er "ith appropriate calculations. . Eiscuss ho" the behavior of division managers is li8ely to be affected by the use of3 a. Return on investment as a performance measure b. Residual income as a performance measure. Pen&elesaian
*. Gi8a &ason Industries terus mengguna8an R$I sebagai satu1satunya u8uran 8inerDa divisi, ma8a Gump tart !ompany #G!% a8an enggan memperoleh RI 8arena a8an menyebab8an gabungan R$I sema8in menurun. Kitungan3 R$I G! > $perating Income ? 'varage $perating 'ssets > 2,000,000 ? 5,000,000 > 2+= R$I RI > $perating Income ? 'varage $perating 'ssets > 400,000 ? ,200,000@ > *5.+= ehingga, !ombined R$I > #2,000,000 A 400,000% ? #5,000,000 A ,200,000% > 2,400,000 ? **,200,000 7 +.18 @ 6erhati8an bah"a biaya aset yang diguna8an untu8 RI adalah biaya pasca1a8uisisi -.200.000, bu8an nilai pra1a8uisisi aset. Kal ini a8an menga8ibat8an manaDer G! 8ehilangan atau memili8i bonus terbatas sampai dengan +0= dari Dumlah yang memenuhi syarat, dengan asumsi bah"a manaDemen bisa memberi8an penDelasan yang meya8in8an untu8 penurunan R$I . 2. Gi8a &ason Industries bisa dibuDu8 untu8 mengguna8an residual income untu8 mengu8ur 8inerDa, G! a8an lebih bersedia untu8 memperoleh RI 8arena sisa pendapatan dari operasi gabungan a8an lebih besar dari sisa pendapatan untu8 G! itu sendiri. Kitungan3 G! residual income
> $perating Income C #minimum rate of return < $perating 'sset% > -2,000,000 C #0.*+ < -5,000,000% > -500,000 RI residual income > $perating Income C #minimum rate of return < $perating 'sset% > -400,000 C #0.*+ < -,200,000% > -*20,000 !ombined residual income> G! residual income A RI residual income > -500,000 A -*20,000 7 /90,000 . Femung8inan adanya pengaruh perila8u manaDer divisi Di8a 8inerDanya diu8ur dengan3 a. R$I yaitu meliputi pertimbangan untu8 menunda perbai8an modal atau modernisasi untu8 menghindari belanDa modal, dan menghindari peluang yang menguntung8an atau investasi
yang a8an menghasil8an lebih banya8 dibanding8an dengan biaya modal perusahaan, tetapi yang dapat menurun8an R$I 8eseluruhan. b. Residual income yaitu meliputi pertimbangan untu8 mencari peluang atau investasi yang a8an mendapat8an lebih besar dari target cost of capital rate dan berusaha untu8 mengurangi aset yang diguna8an dalam bisnis.
