Question
1. Brissett Corporation makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below: GK
1. Brissett Corporation makes three products that use the current constraint, which is a particular type of machine. Data concerning those products appear below:
| GK | LQ | XK | ||||
| Selling price per unit | $ | 326.07 | $ | 543.33 | $ | 517.00 |
| Variable cost per unit | $ | 252.03 | $ | 420.84 | $ | 397.69 |
| Time on the constraint (minutes) | 4.20 | 8.10 | 8.00 | |||
Required:
a. Rank the products in order of their current profitability from the most profitable to the least profitable. In other words, rank the products in the order in which they should be emphasized.
b. Assume that sufficient constraint time is available to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? (Round your answer to 2 decimal places.)
2. Financial data for Beaker Company for last year appear below:
| Beaker Company | |||||||||||
| Statements of Financial Position | |||||||||||
| Beginning Balance | Ending Balance | ||||||||||
| Assets: | |||||||||||
| Cash | $ | 273,000 | $ | 336,920 | |||||||
| Accounts receivable | 191,000 | 200,000 | |||||||||
| Inventory | 313,000 | 251,000 | |||||||||
| Plant and equipment (net) | 438,000 | 398,000 | |||||||||
| Investment in Cedar Company | 255,000 | 277,000 | |||||||||
| Land (undeveloped) | 305,000 | 305,000 | |||||||||
| Total assets | $ | 1,775,000 | $ | 1,767,920 | |||||||
| Liabilities and owners' equity: | |||||||||||
| Accounts payable | $ | 192,000 | $ | 171,000 | |||||||
| Long-term debt | 839,000 | 839,000 | |||||||||
| Owners' equity | 744,000 | 757,920 | |||||||||
| Total liabilities and owners' equity | $ | 1,775,000 | $ | 1,767,920 | |||||||
|
| |||||||||||
| Beaker Company | |||||||||||
| Income Statement | |||||||||||
| Sales | $ | 2,440,000 | |||||||||
| Less operating expenses | 2,074,000 | ||||||||||
| Net operating income | 366,000 | ||||||||||
| Less interest and taxes: | |||||||||||
| Interest expense | $ | 102,000 | |||||||||
| Tax expense | 139,080 | 241,080 | |||||||||
| Net income | $ | 124,920 | |||||||||
The company paid dividends of $111,000 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.
Required:
a. Compute the company's margin, turnover, and return on investment for last year.
b. The Board of Directors of Beaker Company has set a minimum required return of 26%. What was the company's residual income last year?
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The Audit Or Iceland A Modern Myth Oberon Modern Plays
Authors: Andrew Westerside And Proto Type Theater
1st Edition
1786824671, 978-1786824677
