Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a) The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. Rush delivery company income statement comparison

a) The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year.

Rush delivery company

income statement comparison

current year prior year

(amount in thousands ).

sales $15000 $11000

cost of goods sold 9750 7480

gross profit $5250 $3520

wages $3900 $3080

utilities 300 250

repairs 75 325

selling 225 200

total expenses $4500 $3855

operating income/(loss) ? ?

operating income/( loss )%. ? ?

total assets(investment base) $4500 $1500

return of investment ? ?

residual income(8%cost of capital). ? ?

Required:

a) Determine the operating income (loss) for each year.

b) Determine the operating income (% of sales) for each year.

c) The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the ROI. Was the decision to invest additional assets in the company successful? Explain.

d) Assuming an 8% cost of capital, calculate the RI for each year. Explain how this compares to your findings in (c).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 2

Authors: Thomas H. Beechy

5th Edition

0071091319, 978-0071091312

More Books

Students also viewed these Accounting questions

Question

Why should goals be specific and measurable?

Answered: 1 week ago