Question
1. The following data are for the Akron Division of Consolidated Rubber, Inc.: Sales $ 750,000 Net operating income $ 45,000 Average operating assets $
1. The following data are for the Akron Division of Consolidated Rubber, Inc.:
Sales | $ | 750,000 |
Net operating income | $ | 45,000 |
Average operating assets | $ | 250,000 |
Stockholders' equity | $ | 75,000 |
Residual income | $ | 15,000 |
For the past year, the turnover used in ROI calculations was:
Multiple Choice
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1.4
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3.3
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10.0
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3.0
2. Milford Corporation has in stock 16,100 kilograms of material R that it bought five years ago for $5.75 per kilogram. This raw material was purchased to use in a product line that has been discontinued. Material R can be sold as is for scrap for $3.91 per kilogram. An alternative would be to use material R in one of the company's current products, S88Y, which currently requires 2 kilograms of a raw material that is available for $7.60 per kilogram. Material R can be modified at a cost of $0.77 per kilogram so that it can be used as a substitute for this material in the production of product S88Y. However, after modification, 4 kilograms of material R is required for every unit of product S88Y that is produced. Milford Corporation has now received a request from a company that could use material R in its production process. Assuming that Milford Corporation could use all of its stock of material R to make product S88Y or the company could sell all of its stock of the material at the current scrap price of $3.91 per kilogram, what is the minimum acceptable selling price of material R to the company that could use material R in its own production process? (Round your intermediate calculations to 2 decimal places.)
Multiple Choice
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$0.88 per kg
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$3.03 per kg
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$4.57 per kg
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$3.91 per kg
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