1. Based on segment margin and average assets, compute the profit margin. 2. Based on segment margin and average assets, compute the asset turnover.3. Based on segment margin and average assets, compute the ROI. Magical Creative Creation (MCC) a division of Marg Stevenson CPA, buys and installs modularoffice components. For most recent year, the division had the following performance targets:2.56%Asset turnoverProfit marginTarget rate of return on investments for RI 13%Cost of capitalIncome tax rate10%40%Actual information concerning the company's performance for last year follows:Total assets at beginning of yearTotal assets at end of yearTotal invested capital (annual average).Sales$3,600,0005,300,0008,000,0009,000,0003,650,0004,770,000675,000Variable operating costsDirect fixed costsAllocated fixed costs

Sales 9,000,000 Less: Variable costs 3,650,000 Contribution margin 5,350,000 Less: Direct…

1. Based on segment margin and average assets, compute the profit margin. 2. Based on segment margin and average assets, compute the asset turnover. 3. Based on segment margin and average assets, compute the ROI.

1. Based on segment margin and average assets, compute the profit margin. 2. Based on segment margin and average assets, compute the asset turnover. 3. Based on segment margin and average assets, compute the ROI.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. Based on segment margin and average assets, compute the profit margin.

2. Based on segment margin and average assets, compute the asset turnover.

3. Based on segment margin and average assets, compute the ROI.

Magical Creative Creation (MCC) a division of Marg Stevenson CPA, buys and installs modular
office components. For most recent year, the division had the following performance targets:
2.5
6%
Asset turnover
Profit margin
Target rate of return on investments for RI 13%
Cost of capital
Income tax rate
10%
40%
Actual information concerning the company's performance for last year follows:
Total assets at beginning of year
Total assets at end of year
Total invested capital (annual average).
Sales
$3,600,000
5,300,000
8,000,000
9,000,000
3,650,000
4,770,000
675,000
Variable operating costs
Direct fixed costs
Allocated fixed costs

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