Activity 3 Austpac Ltd has spent $468,900 on a research project. Mr Fernando asked the management accountant to report on this project. The...

Profit (Loss)

45,000

(75,000)

(30,000)

Should Austpac drop product SP2? As a management accountant, provide your advice.

Activity 8

An outlet manager for the Aussie Food Company is being considered for year-end bonus because their divisional return on investment has increased 4%. You have been asked to evaluate the following data and make a recommendation about the bonus.

Outlet sales

Outlet income

Outlet assets (net of depreciation)

Year 1

$1,200,000

$60,000

$500,000

Year 2

$1,600,000

$64,000

$400,000

Required:

1. Compute the profit margin, investment turnover and return on investment for both years.
2. Identify the component of return on investment that is responsible for the overall increase in ROI. What may have caused the increase?

Based on your findings, recommendation on whether the manager should be rewarded for the performance of this division? Explain.