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East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $630,000 Cost of goods sold 380,000 Gross margin $250,000 Selling and administrative expense 174,400 Operating income $ 75,600 Less: Income taxes (@ 40%) 30,240    Net income $ 45,360 Total capital employed equaled $399,000. East Mullett's actual cost of capital is 8 percent. Required: Calculate the EVA for East Mullett Manufacturing. $fill in the blank 1

East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $630,000 Cost of goods sold 380,000 Gross margin $250,000 Selling and administrative expense 174,400 Operating income $ 75,600 Less: Income taxes (@ 40%) 30,240    Net income $ 45,360 Total capital employed equaled $399,000. East Mullett's actual cost of capital is 8 percent. Required: Calculate the EVA for East Mullett Manufacturing. $fill in the blank 1

FINANCIAL ACCOUNTING
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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  1. Calculating Economic Value Added

    East Mullett Manufacturing earned operating income last year as shown in the following income statement:

    Sales $630,000
    Cost of goods sold 380,000
    Gross margin $250,000
    Selling and administrative expense 174,400
    Operating income $ 75,600
    Less: Income taxes (@ 40%) 30,240
       Net income $ 45,360

    Total capital employed equaled $399,000. East Mullett's actual cost of capital is 8 percent.

    Required:

    Calculate the EVA for East Mullett Manufacturing.
    $fill in the blank 1

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