1.

Margin, Turnover, Return on Investment

Pelak Company had sales of $5,032,000, expenses of $4,320,000, and average operating assets of $4,840,000.

Required:

If required, round your answers to nearest whole value.

1. Compute the operating income. $fill in the blank 1

2. Compute the margin (as a percent) and turnover ratio. If required, round your answers to one decimal place.

Margin	fill in the blank 2 %
Turnover	fill in the blank 3

3. Compute the ROI as a percent. Use the part 2 final answers in these calculations and round the final answer to two decimal places. fill in the blank 4 %

2.

Calculating Residual Income

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

Sales	$531,250
Cost of goods sold	280,000
Gross margin	$251,250
Selling and administrative expense	194,800
Operating income	$56,450
Less: Income taxes (@ 40%)	22,580
Net income	$33,870

At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000. Pelican requires a minimum rate of return of 10%.

Required:

For Pelican, calculate:

1. Average operating assets	$fill in the blank 1
2. Residual income