Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

As the operations manager for Valley Kayaks (as described in the previous problem), you find yourself faced with an interesting situation Marketing has informed you

image text in transcribed
image text in transcribed
As the operations manager for Valley Kayaks (as described in the previous problem), you find yourself faced with an interesting situation Marketing has informed you tha they have lost a number of sales because of a lack of inventory, Kayaks, being seasonal in nature, have to be in stock at your dealers if they are to be sold (customers are not willing to wait). The director of marketing proposes that you increase inventories by 20 percent (a major investment to you). She has also given the information in the following table. Use Elgure 2.3 Proposed Impact of Inventory Category Current Values Increase $ 4,900,000 20% (improvement) Cost of goods sold $ 3,500,000 ON Variable expenses 700,000 10% - reduction Fived expenses $ 245.000 15% (increase) Inventory $ 320,000 20% Accounts receivable $ 174.000 0% Other current assets 747,000 0% Fored assets 675,000 0% Sales S $ a.Using the information given, complete the following table and calculate the ROA for current values and new values (Round "ROA" to 2 decimal places.) Current Values New Values $ Category Sales Cost of goods sold Variable expenses Fixed expenses Invertory Accounts receivable Other current assets Fixed assets ROA 4,900,000 3,500,000 700,000 245,000 320,000 174.000 747.000 675,000 96 $ % b. Would the projected change in ROAjustly the inventory investment? Yes No

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

Step: 3

blur-text-image

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

Financial Accounting

Authors: Dr Carl S. Warren, Dr James M. Reeve, Philip E. Fess

9th Edition

032418803X, 978-0324188035

More Books

Students also viewed these Accounting questions

Question

Determine miller indices of plane A Z a/2 X a/2 a/2 Y

Answered: 1 week ago

Question

Calculate a utility estimate for a target organization

Answered: 1 week ago