Analyzing Operational Changes Operating results for department B of Shaw Company during 2016 are as follows: Sales Cost of goods sold Gross profit Direct expenses Common expenses Total expenses Net loss $770,000 480,000 290,000 215,000 123,000 338,000 $(48.000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 10% and making an additional advertising expenditure of $40,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 10%, the effect on net income (loss) would be $

Analyzing Operational Changes Operating results for department B of Shaw Company during 2016 are as follows: Sales Cost of goods sold Gross profit Direct expenses Common expenses Total expenses Net loss $770,000 480,000 290,000 215,000 123,000 338,000 $(48.000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 10% and making an additional advertising expenditure of $40,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 10%, the effect on net income (loss) would be $

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The manager of the West store has concerns relating to the store’s financial performance and has asked for help analyzing transfer costs. After calculating the operating income in dollars and the operating income percent, analyze the following financial information to determine costs that may need further investigation. It may be helpful to perform a vertical analysis (i.e., perform a vertical analysis). warehouse west store sales $18,920 $43,860 cost of goods sold 9,082 21,053 gross profit $9,838 $22,807 selling expenses 860 2,752 wages expense 4,730 15,351 costs allocated from corporate 2,838 4,386 Total expenses $8,428 $22,489 operating income/(loss) $ ? ? Operating Income/(loss) % ? ?
Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A B C Sales $ 330,000 $ 480,000 $ 500,000 Cost of goods sold (242,000 ) (184,000 ) (190,000 ) Sales commissions (30,000 ) (44,000 ) (44,000 ) Contribution margin 58,000 252,000 266,000 General fixed operating expenses (allocation of president’s salary) (92,000 ) (92,000 ) (92,000 ) Advertising expense (specific to individual divisions) (6,000 ) (20,000 ) 0 Net income (loss) $ (40,000 ) $ 140,000 $ 174,000 Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising…
Analyzing Operational ChangesOperating results for department B of Delta Company during 2016 are as follows: Sales $550,000 Cost of goods sold 378,000 Gross profit 172,000 Direct expenses 120,000 Common expenses 66,000 Total expenses 186,000 Net loss $(14,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 15% and making an additional advertising expenditure of $60,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 15%, the effect on net income (loss) would be $______
Analyzing Operational ChangesOperating results for department B of Shaw Company during 2019 are as follows: Sales $800,000 Cost of goods sold 480,000 Gross profit 320,000 Direct expenses 200,000 Common expenses 123,000 Total expenses 323,000 Net loss $(3,000) If department B could maintain the same physical volume of product sold while raising selling prices an average of 6% and making an additional advertising expenditure of $40,000, what would be the effect on the department’s net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 6%, the effect on net income (loss) would be $Answer
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 $ 800,000 350,000 450,000 $ 350,000 250,000 Sales $ 450,000 Variable expenses Contribution margin 100,000 100,000 350,000 Fixed expenses 400,000 140,000 260,000 Net operating income (loss) $ 50,000 $ (40,000) $ 90,000 The company says that $60,000 of the fixed expenses being charged to Department A are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department A is discontinued the sales in Department B will drop by 18%. What is the financial advantage (disadvantage) of discontinuing Department A? Multiple Choice $(103,000) $(83,000) $(92,000) $(101,000)
The South Division of Wiig Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 1. 2. 3. Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. Return on Investment $2,950,000 1,947,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $155,000. Reduce average operating assets by 4%. Action 1 595,000 (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%.) Action 2 5,000,000 Action 3 (b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%.) Return on investment do % % % %
A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent and other amounts to whole dollars.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ $ A 470,000 160,000 15 % 16 % $ $ $ Company B 680,000 43,000 19 % 57,000 % C $ 560,000 $ 145,000 $ % 10 % 5,000
Profit Margin, Investment Turnover, and return on investment The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges): Sales $816,000 Cost of goods sold 367,200 Gross profit $448,800 Administrative expenses 285,600 Income from operations $163,200 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $1,360,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin 2 x % Investment turnover Rate of return on investment % b. If expenses could be reduced by $40,800 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer…
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 $ 1,600,000 700,000 900,000 660,000 Net operating income $4 240,000 Average operating assets $ 1,000,000 At the beginning of this year, the company has a $325,000 investment opportunity with the characteristics: Sales Contribution margin ratio Fixed expenses $ 520,000 70 % of sales $ 312,000 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, wha (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%.)) ROI % ( Prev 1O Pr Ps to search RELS
Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Training Services $530,000 $780,000 Athletic Wear $600,000 $106,000 $ 21, 200 $156,000 $ 31,200 15% $120,000 $ 30,000 13% Sales Average operating assets Operating income Minimum required rate of return Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. Fitness training Spa services Athletic wear ROI Residual income % % % 2. Compute the residual income for each division. 13% Fitness Training Spa Services Athletic Wear 3. Assume that each division is presented with an investment opportunit
Profit Margin, Investment Turnover, and Return on Investment The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as follows (assuming no support department allocations): Sales $230,000,000 Cost of goods sold (126,500,000) Gross profit $103,500,000 Administrative expenses (64,400,000) Operating income $39,100,000 The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $143,750,000 of assets have been invested in the Consumer Products Division. If required, round your answers to one decimal place. Profit margin fill in the blank 1 % Investment turnover fill in the blank 2 Return on investment fill in the blank 3 % b. If expenses could be reduced by $3,450,000 without decreasing sales, what…

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