A company operated at 82% of its capacity for the past year. Fixed costs during this time were $126,000, variable costs were 60% of sales, and sales were $790,000. Calculate the company's operating profit. a. $175,000 b. $82,000 c. $155,800 d. $190,000
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- The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 1,008,000 $ 50.40 Variable expenses 604,800 30.24 Contribution margin 403,200 20.16 Fixed expenses 323,200 16.16 Net operating income 80,000 4.00 Income taxes @ 40% 32,000 1.60 Net income $ 48,000 $ 2.40 The company had average operating assets of $499,000 during the year. Required: 5. As a result of a more intense effort by sales people, sales are increased by 10%; operating assets remain unchanged. 6. At the beginning of the year, obsolete inventory carried on the books at a cost of $18,000 is scrapped and written off as a loss, thereby lowering net operating income. 7. At the beginning of the year, the company uses $178,000 of cash (received on accounts receivable) to repurchase some of its common stock.From the following information, compute percent change in operating income for the current year. Sales for the previous year $210,000 Contribution margin 181,000 Fixed costs 125,000 Operating income 36,000 Assume that sales for the current year increased by 17%. a.86% b.92% c.74% d.96%Westerville Company reported the following results from last year's operations: sales $ 1,800,000 Variable expenses 740,000 contribution margin 1,060,000 Fixed expenses. 700,800 Net operating income $ 360,000 Average operating assets 1,200,880 At the beginning of this year, the company has a $400.000 investment opportunity with the following cost and revenue characteristics: sales. $ 6 00,000 Contribution margin ratio 60 % of sales Fixed expenses. $ 288,006 The company's minimum required rate of retum is 10% 1- what is last years residual income? 2- what is the residual income of this years investment opportunity? 3-what is the ROI related to this year’s investment opportunity? (Do not round intermediate calculations)
- 7. Boone Corporation's income statement for the most recent month is given below. Company Store G Store H Sales 150,000 60,000 90,000 Variable expenses 60,000 30,000 30,000 Contribution margin 90,000 30,000 60,000 Traceable fixed expenses 60,000 15,000 45,000 Division segment margin 30,000 15,000 15,000 Common fixed expenses 10,000 Net operating income $20,000 Store H sales will increase by $15,000 with no change in fixed costs. What is the new division segment margin for Store H? Group of answer choices $35,000 $25,000 $40,000 $50,000Eastwick produces and sells three products. Last month's results are as follows: P1 P2 P3 Revenues $ 270,000 $ 370,000 $ 370,000 Variable costs 57,000 220,000 137,100 Fixed costs total $370,000. What sales volume would generate an operating profit of $235,000? (Assume the current product mix.)Cost Volume Profit Total Company produces one type of machine with the following costs and revenues for the year: Total revenues $4,200,000 Total fixed costs $1,400,000 Total variable costs $2,800,000 Total units produced and sold 700,000 A.calculate the break even quantity of sales increased by 20%b. Calculate the operating margin if 50000 unit are sold
- Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000 Variable expenses 690,000 Contribution margin 810,000 Fixed expenses 435,000 Net operating income $ 375,000 Average operating assets $ 1,250,000 At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics: Sales $ 420,000 Contribution margin ratio 70 % of sales Fixed expenses $ 252,000 The company’s minimum required rate of return is 10%. 1. Assume that the contribution margin ratio of the investment opportunity was 65% instead of 70%. If Westerville’s Chief Executive Officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity? yes or no 2. Would the owners of the company want her to pursue the investment opportunity?The following data are available for the Valentine Corporation for a recent month: Product A Product B Product C Total Selling price $23 $69 $115 Sales $115,000 $172,500 $287,500 |Variable |$91,000 $104,000 $27,000 Expenses Contribution $24,000 $68,500 $260,500 Margin Fixed $55,000 Expenses Net Operating Income What is the sales revenue required from Product C at the break even point?Last year's contribution format income statement for Huerra Company is given below: Unit $ 49.60 29.76 19.84 15.74 Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 40% Net income The company had average operating assets of $496,000 during the year. Required: 1. Compute last year's margin, turnover, and return on investment (ROI). For each of the following questions, indicate whether last year's margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI. Consider each question separately. 2. Using Lean Production, the company is able to reduce the average level of inventory by $95,000. 3. The company achieves a cost savings of $11,000 per year by using less costly materials. 4. The company purchases machinery and equipment that increase average operating assets by $124,000. Sales remain unchanged. The new, more efficient equipment reduces production costs by $7,000 per…
- Pippen Co. recorded operating data for its shoe division for the year. The company's desired return is 5%. $1,000,000 200,000 Sales Contribution margin Total direct fixed costs 101,721 Average total operating assets 400,000 How much is the controllable margin for the year?Westerville Company reported the following results from last year’s operations: Sales $ 1,800,000 Variable expenses 740,000 Contribution margin 1,060,000 Fixed expenses 700,000 Net operating income $ 360,000 Average operating assets $ 1,200,000 At the beginning of this year, the company has a $400,000 investment opportunity with the following cost and revenue characteristics: Sales $ 600,000 Contribution margin ratio 60 % of sales Fixed expenses $ 288,000 The company’s minimum required rate of return is 10%. 6. What is the ROI related to this year’s investment opportunity? (Do not round intermediate calculations.) 7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 8. If the company pursues the investment opportunity and otherwise performs the same as last year,…Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Total Department A Department B Sales $ 800,000 $ 350,000 $ 450,000 Variable expenses 320,000 120,000 200,000 Contribution margin 480,000 230,000 250,000 Fixed expenses 400,000 140,000 260,000 Net operating income (loss) $ 80,000 $ 90,000 $ (10,000) The company says that $120,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 12%. What is the financial advantage (disadvantage) of discontinuing Department B?
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