Question
Blossom produces and sells two productsaluminum and vinyl. Each of these products is made in a dedicated manufacturing facility, and the product line managers are
Blossom produces and sells two productsaluminum and vinyl. Each of these products is made in a dedicated manufacturing facility, and the product line managers are evaluated based on the product lines return on investment. The following data is from the most recent year of operations.
Aluminum | Vinyl | ||||
---|---|---|---|---|---|
Sales | $4,500,000 | $4,050,000 | |||
Variable costs | 2,000,000 | 2,156,250 | |||
Direct fixed costs | 1,600,000 | 1,533,300 | |||
Average assets | 3,000,000 | 1,500,000 |
(a1)Calculate the margin and asset turnover for each product line. (Round answers to 2 decimal places, e.g. 5.12 and 5.12%.)
Aluminum | Vinyl | ||
---|---|---|---|
Margin | enter ratio rounded to 2 decimal places % | enter ratio rounded to 2 decimal places % | |
Asset turnover | enter ratio rounded to 2 decimal places | enter ratio rounded to 2 decimal places |
(a2)Calculate return on investment for each product line. (Round ROI to 2 decimal places, e.g. 5.12%.)
Aluminum | Vinyl | ||
---|---|---|---|
ROI | enter percentages rounded to 2 decimal places % | enter percentages rounded to 2 decimal places % |
(c1)
Both product line managers would like to improve their respective returns on investment, and each manager has a different idea about how to accomplish this. If the aluminum product line manager was able to increase sales volume such that the new asset turnover was 2.20 times, what would be the new operating income? (Round variable cost ratio to 2 decimal places, e.g. 5.25 and final answers to 0 decimal places, e.g. 12,500.)
Operating income | $enter the operating income in dollars rounded to 0 decimal places |
What would be the new return on investment? (Round ROI to 2 decimal places, e.g. 5.12%.)
New ROI | enter the new return on investment in percentages rounded to 2 decimal places % |
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