Direct materials Setup Production $5,000 per unit $1,500 per setup-hour $ 415 per machine-hour General administration and selling costs for Simplegreen total $7,820,000 in 2017. During the year, Excellent Motor produced 11,000 Simplegreen cars using 6,000 setup-hours and 139,000 machine-hours. It sold these cars for $12,000 each. 1. Assuming that Excellent Motor defines investment as average assets during the period, what is the return on investment for the Simplegreen division? 2. Calculate the residual income for Simplegreen if Excellent Motor has a required rate of return of 16% on investments. Required
Direct materials Setup Production $5,000 per unit $1,500 per setup-hour $ 415 per machine-hour General administration and selling costs for Simplegreen total $7,820,000 in 2017. During the year, Excellent Motor produced 11,000 Simplegreen cars using 6,000 setup-hours and 139,000 machine-hours. It sold these cars for $12,000 each. 1. Assuming that Excellent Motor defines investment as average assets during the period, what is the return on investment for the Simplegreen division? 2. Calculate the residual income for Simplegreen if Excellent Motor has a required rate of return of 16% on investments. Required
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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