Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

At the end of the fiscal year Zeta Tube performs an analysis comparing current year income statement to prior year income statement. The income statement

At the end of the fiscal year Zeta Tube performs an analysis comparing current year income statement to prior year income statement. The income statement comparison for Forklift Material Handling shows the income statement for the current and prior year.

A. In dollars, calculate the operating income (loss) for each year.

B. Calculate the operating income (percentage) for each year.

C. Zeta Tube has decided to upgrade their equipment in the current year (the difference in total assets from prior year to current year). Calculate the return on investment for these purchases. Was the decision to invest in additional assets in the company successful? Explain.

(Amount in thousands) Current Year Prior Year
Sales $ 33,750 $ 24,750
Cost of goods sold $ 21,938 $ 16,830
Gross Profit $ 11,812 $ 7,920
Wages $ 8,775 $ 6,188
Utilities $ 675 $ 250
Repairs $ 169 $ 325
Selling $ 506 $ 200
Total expenses $ 10,125 $ 6,963
Operating income
Operating income %
Total assets (investment base) $ 4,500 $ 1,500
Return on investment
Residual income (8% cost of capital)

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 In An Economic Context

Authors: Jamie Pratt

7th Edition

0470128828, 978-0470128824

More Books

Students also viewed these Accounting questions

Question

Compare the advantages and disadvantages of external recruitment.

Answered: 1 week ago

Question

Describe the typical steps in the selection process.

Answered: 1 week ago