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4 years ago

Identify the incorrect statement about sales promotions.

Business

1 answer:

Harman [31]4 years ago

5 0

Answer:

a. Sales promotions have increased because of competition in emerging markets.

Explanation:

Competition in emerging markets is <u>irrelevant for sales promotions</u>. If you are present in a particular market, competition in other markets won't affect the efficiency of your sales promotions.

On the other hand, other statements are correct. Sales promotions are a great tool to hinder consumer price resistance, as they emphasize the benefits of the product and make the whole promotion more convincing.

Technology upgrades vastly affect and improve sales promotions (use of AR/VR in promotions, media, AI...). The wider market of ad agencies gives companies a better choice (with a more competitive price) of agencies that will conduct the sales promotions.

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Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A

earnstyle [38]

Answer:

1. See the calculations under part 1 below.

2. We have:

Division A's Residual Income (loss) = $395,200

Division B's Residual Income (loss) = (105,600)

Division C's Residual Income (loss) = $0

3.a. Only Division B will accept the investment opportunity.

3.b. Divisions A and B will accept the investment opportunity.

Explanation:

Given:

Division A Division B Division C

Sales $15,200,000 $35,200,000 $25,200,000

Average operating assets $3,040,000 $7,040,000 $5,040,000

Net operating income $668,800 $563,200 $655,200

Min. req'd rate of return 9.00% 9.50% 13.00%

Therefore, we have:

1. Compute the margin, turnover, and return on investment (ROI) for each division.

The formulae for calculating these are:

Margin = Net Operating Income / Sales

Turnover = Sales / Average Operating Assets

Return on Investment = Margin * Turnover

Therefore, we have:

Division A:

Margin = $668,800 / $15,200,000 = 0.0440, or 4.40%

Turnover = $15,200,000 / $3,040,000 = 5 times

Return on Investment = 4.40% * 5 = 22%

Division B:

Margin = $563,200 / $35,200,000 = 0.0160, or 1.60%

Turnover = $35,200,000 / $7,040,000 = 5 times

Return on Investment = 1.60% * 5 = 8%

Division C:

Margin = $655,200 / $25,200,000 = 0.0260, or 2.60%

Turnover = $25,200,000 / $5,040,000 = 5 times

Return on Investment = 2.60% * 5 = 13%

2. Compute the residual income (loss) for each division.

The formula for calculating this is:

Residual Income (loss) = Net Operating Income - Minimum Required Return * Average Operating Assets

Therefore, we have:

Division A's Residual Income (loss) = $668,800 - (9.00% * $3,040,000) = $395,200

Division B's Residual Income (loss) = $563,200 - (9.50% * $7,040,000) = (105,600.00)

Division C's Residual Income (loss) = $655,200 - (13.00% * $5,040,000) = $0

3-a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity?

The decision criterion is for a division to accept the investment opportunity if its Return on Investment (ROI) is lower than 10%. Otherwise, reject.

Based on the Return on Investment results in part 1 above, only Division B will accept the investment opportunity.

3-b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity?

The decision criterion is for a division to accept the investment opportunity if its minimum required rate of return is lower than 10%. Otherwise, reject.

Based on the information on minimum required rate of returns given in the question, Divisions A and B will accept the investment opportunity.

5 0

3 years ago

How your organization starts its risk mitigation process depends entirely on the type of organization you are working in.

dezoksy [38]

Answer: False

Explanation:

Risk mitigation simply has to do with the strike that are taken by an economic agent such as an individual, firm or the government in order to prevent risk and reduce it to its minimal level.

It should be noted that risk mitigation is identical for every organization as the same process is being followed. Therefore, the question is false.

6 0

4 years ago

Kiley Corporation had these transactions during 2017. Analyze the transactions and indicate whether each transaction is an opera

OverLord2011 [107]

Explanation:

The cash flow statement includes three types of activities which are listed below:

1. Operating activities: This involves all transactions that after net income impact the working capital. It would subtract the rise in current assets and a reduction in current liabilities, while adding the decline in current assets and an increase in current liabilities.

It would moderate those shifts in working capital. For addition, the depreciation cost is applied to the net income, and the loss on asset sales is added while the benefit on asset sales is deducted

2. Investing activities: it tracks operations that include buying and selling long-term properties. The buying is a cash outflow whereas the sale is a cash inflow

3. Financing operations or activities : it monitors transactions that have an impact on long-term debt and equity balance of shareholders. Share issue is cash inflow while redemption and dividend is cash outflow.

So, the categorization is shown below:

A) Purchased a machine for $30,000, giving a long-term note in exchange. = non-cash investing and financing activity as it does not involved any cash transaction

B) Issued $50,000 par value common stock for cash = Cash inflow and come under the financing activities

C) Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000. = non - cash financing activities as it does not involved any cash transaction

D) Declared and paid a cash dividend of $13,000.= Cash outflow and come under the financing activities

E) Sold a long-term investment with a cost of $15,000 for $15,000 cash. = Cash inflow and come under the investing activities

F) Collected $16,000 from sale of goods = Cash inflow and come under the operating activities

G) Paid $18,000 to suppliers = Cash outflow and come under the investing activities

7 0

4 years ago

The larger the investment you make, the easier it will be to

worty [1.4K]

A) get money from other sources

7 0

3 years ago

Trusper Company was organized on January 1, Year 1 and has had 1,000 shares of $200 par value, 10% cumulative preferred stock ou

snow_tiger [21]

Answer:

$50,000

Explanation:

Generally, preferred stockholders receive dividends earlier than common stockholders. Moreover, as the preference shareholders are cumulative, if they do not receive dividends current year, they will receive in the next year. Finally, preferred dividend is fixed until there are new issuance of preferred stock.

Preferred dividends for Year 1 = 1,000 shares × $200 × 10% = $20,000

For year 2 = $20,000

Given, total dividends in year 1 = $15,000

Therefore, company provides $15,000 to preferred dividends. No common dividends in year 1.

However, in the next year (Year 2), the company will pay $5,000 + $20,000 = $25,000 to preferences shareholders.

Therefore, remaining dividends are for common stockholders.

Year 2 common stockholders dividends = $75,000 - $25,000 = $50,000.

8 0

4 years ago