Financial data for Hunger Games Company for last year appear below:

Hunger Games Company
Statements of Financial Position
	Beginning Balance	Ending Balance
Assets:
Cash	$120,700	$220,000
Accounts receivable	225,000	475,000
Inventory	317,000	390,000
Plant and equipment (net)	940,000	860,000
Investment in Katniss Company	100,000	98,000
Land (undeveloped)	198,000	65,000
Total assets	$1,900,700	$2,108,000
Liabilities and owners' equity:
Accounts payable	$178,700	$8,000
Long-term debt	512,000	600,000
Owners' equity	1,210,000	1,500,000
Total liabilities and owners' equity	$1,900,700	$2,108,000

Hunger Games Company
Income Statement
Sales		$4,500,000
Less operating expenses		4,000,000
Net operating income		500,000
Less interest and taxes:
Interest expense	$97,000
Tax expense	127,000	224,000
Operating Income		$276,000

The "Investment in Katniss Company" on the statement of financial position represents an investment in the stock of another company. Required:

1.Compute the company's margin, turnover, and return on investment for last year.

2.The Board of Directors of Hunger Games Company have set a minimum required return of 15%. What was the company's residual income last year? Wizard Company has an old machine that is fully depreciated but has a current salvage value of $10,000. The company wants to purchase a new machine that would cost $60,000 and have a five-year useful life and zero salvage value. Expected changes in annual revenues and expenses if the new machine is purchased are:

Increased revenues	$10,000	$120,000
Increased expenses	14,000
Salary of additional operator
Supplies
Depreciation 12,000
Maintenance	8,000	90,000
Increased net income		$30,000

(Ignore income taxes in this problem.)

Required:

1.What is the payback period on the new equipment?

2. What is the simple rate of return on the new equipment?

ronman Inc. is a retail distributor for MZB-33 computer hardware and related software. Ironman prepares annual sales forecasts, of which the first six months of the coming year are presented below:

	Hardware units	Hardware dollars	Software	Total sales
January	140	$420,000	$180,000	$600,000
February	130	390,000	160,000	550,000
March	100	300,000	120,000	420,000
April	50	150,000	100,000	250,000
May	60	180,000	120,000	300,000
June	100	300,000	200,000	500,000

Cash sales account for 25% of Ironman's total sales, 30% of the total sales are paid by bank credit card, and the remaining 45% are on open account (Ironman's own charge accounts). The cash and bank credit card sale payments are received in the month of the sale. Bank credit card sales are subject to a 4% discount, which is deducted immediately. The cash receipts for sales on open account are 70% in the month following the sale and 28% in the second month following the sale, the remaining are uncollectible. Ironman's month-end inventory requirements for computer hardware units are 30% of the next month's sales. The units must be ordered two months in advance due to long lead times quoted by the manufacturer. Required:

1.Calculate the cash that Ironman can expect to collect during April. Show all of your calculations.

2.Determine the number of computer hardware units that should be ordered in January. Show all of your calculations. Wolverine Company's average cost per unit is $1.425 at the 16,000-unit level of activity and $1.38 at the 20,000-unit level of activity. The selling price is $3.00 per unit.

Assume that all of the activity levels mentioned in this problem are within the relevant range.

Predict the following items for Wolverine Company:

Required:

1. Variable cost per unit.

2. Total fixed cost per period.

3. Total expected costs at the 18,000-unit level of activity.

4. Total Contribution Margin at the 18,000 unit level of production and sales.