Monfett Manufacturing earned operating income last year as shown in the following income statement: Sales $620,000 Cost of goods sold 316,000 Gross margin $304,000 Selling and administrative expense 219,000 Operating income $85,000 Less: Income taxes (at 40%) 34,000 Net income $51,000 At the beginning of the year, the value of operating assets was $263,000. At the end of the year, the value of operating assets was $336,000. Monfett Manufacturing requires a minimum rate of return of 15%. Total capital employed equals $350,000 and actual cost of capital is 6%. Calculate the following: A. Residual income $fill in the blank 1 B. EVA $fill in the blank 2
Monfett Manufacturing earned operating income last year as shown in the following income statement: Sales $620,000 Cost of goods sold 316,000 Gross margin $304,000 Selling and administrative expense 219,000 Operating income $85,000 Less: Income taxes (at 40%) 34,000 Net income $51,000 At the beginning of the year, the value of operating assets was $263,000. At the end of the year, the value of operating assets was $336,000. Monfett Manufacturing requires a minimum rate of return of 15%. Total capital employed equals $350,000 and actual cost of capital is 6%. Calculate the following: A. Residual income $fill in the blank 1 B. EVA $fill in the blank 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Monfett Manufacturing earned operating income last year as shown in the following income statement:
| Sales | $620,000 | |
| Cost of goods sold | 316,000 | |
| Gross margin | $304,000 | |
| Selling and administrative expense | 219,000 | |
| Operating income | $85,000 | |
| Less: Income taxes (at 40%) | 34,000 | |
| Net income | $51,000 |
At the beginning of the year, the value of operating assets was $263,000. At the end of the year, the value of operating assets was $336,000. Monfett Manufacturing requires a minimum
Calculate the following:
| A. Residual income | $fill in the blank 1 |
| B. EVA | $fill in the blank 2 |
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