Refers to b - how we best understand information
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Sources must be cited in APA format. Your response should be a minimum of one (1) single-spaced page to a maximum of two (2) pages in length; refer to the "Assignment Format" page for specific format requirements.
Return on Investment and Residual Income
Portia Carter is the president of a company that owns six multiplex movie theaters. Carter has delegated decision-making authority to the theater managers for all decisions except those relating to capital expenditures and film selection. The theater managers' compensation depends on the profitability of their theaters. Max Burgman, the manager of the Park Theater, had the following master budget and actual results for the month.
Controllable variable costs
Controllable fixed costs
Other administrative expenses
Theater operating income
1. Assuming that the theaters are profit centers, prepare a performance report for the Park Theater using the chart below. Include a flexible budget. Determine the variances between actual results, the flexible budget, and the master budget.
2. Evaluate Burgman's performance as a manager.
3. Assume that the managers are assigned responsibility for capital expenditures and that the theaters are thus investment centers. Park Theater is expected to generate a desired ROI of at least 6 percent on average invested assets of $2,000,000.
a. Compute the theater's return on investment and residual income using the chart below.
b. Using the ROI and residual income, evaluate Burgman's performance as a manager.
Use the following format requirements on all submissions.
Writing Style APA (American Psychological Association)
Note: To find detailed information on APA manuscript style guidelines on the Internet, go to www.apastyle.org.
Margins 1" all sides
Double-space between paragraphs
Indent first line of each paragraph
Type Style and Size Times New Roman,
Software MS Word