## Required Information(The following information applies to the questions displayed below.)**Westerville Company** reported the following results from last year's operations:- **Sales:** $2,300,000- **Variable expenses:** $670,000- **Contribution margin:** $1,630,000- **Fixed expenses:** $1,170,000- **Net operating income:** $460,000- **Average operating assets:** $1,437,500At the beginning of this year, the company has a $287,500 investment opportunity with the following cost and revenue characteristics:- **Sales:** $460,000- **Contribution margin ratio:** 50% of sales- **Fixed expenses:** $161,000The company’s minimum required rate of return is 15%.---**2. What is last year’s turnover? (Round your answer to 1 decimal place.)**\[ \text{Turnover: \_\_\_} \]

The turnover ratio indicates the efficiency of the total assets to generate sales. It can be…

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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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Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Division Cleaning Products Division Sales $34,620,000 $31,340,000 Operating income 2,397,700 1,254,300 Operating assets, January 1 6,400,000 5,760,000 Operating assets, December 31 7,590,000 6,640,000 Forchen, Inc., requires an 8 percent minimum rate of return. 1. Calculate residual income for the Small Appliances Division. $ 2. Calculate residual income for the Cleaning Products Division. $ 3. What if the minimum required rate of return was 9 percent? How would that affect the residual income of the two division?
Required information [The following information applies to the questions displayed below] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets ROI At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics: Sales $ 1,800,000 435,000 1,365,000 1,005,000 $360,000 $ 1,200,000 $360,000 $ 216,000 The company's minimum required rate of return is 10% Contribution margin ratio Fixed expenses 70 of sales. 6. What is the ROI related to this year's investment opportunity?
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%
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Calculating Residual Income East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $3,750,000 Cost of goods sold 2,250,000 Gross margin $1,500,000 Selling and administrative expense 1,200,000 Operating income $ 300,000 Less: Income taxes (@ 40%) 120,000 Net income $ 180,000 At the beginning of the year, the value of operating assets was $1,600,000. At the end of the year, the value of operating assets was $1,400,000. East Mullett requires a minimum rate of return of 5%. What is the residual income?
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?
dreams demstime dremstph %24 The co ired rate of is 15%. Requlred Information The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: $ 2,300,000 Sales Variable expenses Contribution margin Fixed expensesi 1,630,000 1,170,000 24 460,000 $ 1,437,500 Net operating income Average operating assets At the beginning of this year, the company has a $287,500 investment opportunity with the following cost and revenue characteristics: $ 460,000 Contribution margin ratio Fixed expenses 50% of sales $ 161,000 The company's minimum required rate of return is 15%. 9. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Do not round Intermedlate calculations. Round your percentage answer to 1 declmal place (I.e., 0.1234 should be considered as 12.3).)
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…
Required information Skip to question [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales $ 1,500,000 Variable expenses 730, 000 Contribution margin 770, 000 Fixed expenses 470,000 Net operating income $ 300,000 Average operating assets $ 937,500 At the beginning of this year, the company has a $362, 500 investment opportunity with the following cost and revenue characteristics: Sales $ 580,000 Contribution margin ratio 70% of sales Fixed expenses $ 319,000 The company's minimum required rate of return is 10%. 8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)
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