Question
1. Assume the Mold Division of SPKY had the following results last year (in thousands). Management's target rate of return is 10% and the weighted
1.
Assume the Mold Division of SPKY had the following results last year (in thousands). Management's target rate of return is 10% and the weighted average cost of capital is 7%. Its effective tax rate is 30%.
| Sales | $6,000,000 |
| Operating income | 900,000 |
| Total assets | 3,000,000 |
| Current liabilities | 750,000 |
What is the SPKY mold division's Return on Investment (ROI)?
| a | 15.00% | |
| b | 25.00% | |
| c | 30.00% | |
| d | 200.00% |
2.
Unit selling price
$20
Variable cost per unit
$12
Annual fixed costs
$280,000
Average operating assets
$1,500,000
What is the SPKY mold division's asset turnover?
| a | 2.0 | |
| b | 3.3 | |
| c | 4.0 | |
| d | 6.7 |
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Management Accounting International
Authors: Anthony A. Atkinson, Robert S. Kaplan, S. Mark Young
4th Edition
0131230263, 978-0131230262
