Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please assist with parts 1-3 and how to calculate 596,400 29.82 Variable expenses Contribution margin Fixed expenses Net operating income Income taxes 400 Net income

Please assist with parts 1-3 and how to calculate image text in transcribed
image text in transcribed
image text in transcribed
596,400 29.82 Variable expenses Contribution margin Fixed expenses Net operating income Income taxes 400 Net income The company had average operating assets of $491,000 during the year Required: 1. Compute the company's return on investment (RO) for the period using the Rol formula stated in terms of margin and turnove For each of the following questions, indicate whether the margin and tumover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately starting in each case from the data used to compute the original ROI in above. 2. Using Lean Production, the company is able to reduce the average level of Inventory by $100,000. (The released funds are used to pay off short-term creditors) 3. The company achieves a cost savings of $6,000 per year by using less costly materials 4. The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $126,000. Interest on the bonds is $19.000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $5,000 per year. 5. As a result of a more intense effort by sales people, sales are increased by 15% operating assets remain unchanged. 6. At the beginning of the year, obsolete inventory carried on the books at a cost of $15.000 is scrapped and written off as a loss 7. At the beginning of the year, the company uses $177,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock Complete this question by entering your answers in the tabs below. Required 1 Required 3 Requi red 6 Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. (Round your intermediate calculations and final answer to 2 decimal places.) ROL Q Search or type URL Problems 994,000 $49.70 313.600 15.58 Variable expenses Contribution margin Fixed expenses Net operating income Income taxes 401 Net Income $ 50.400 $ 2.52 The company had average operating assets of $491.000 during the year Required: 1. Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover For each of the following questions, indicate whether the margin and turnover will increase, decrease or remain unchanged as a resut of the events described, and then compute the new ROI figure. Consider each question separately. Starting in each case from the data used to compute the original ROI in above 2. Using Lean Production, the company is able to reduce the average level of inventory by $106.000. (The released funds are used to Day of short term creditors.) 3. The company achieves a cost savings of $6.000 per year by using less costly materials 4. The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $126,000. Interest on the bonds is $19.000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $5,000 per year 5. As a result of a more intense effort by sales people, sales are increased by 15% operating assets remain unchanged 6. At the beginning of the year, obsolete inventory carried on the books at a cost of $15,000 is scrapped and written off as a loss. 7. At the beginning of the year, the company uses $177,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required) Using Lean Production, the company is able to reduce the average level of inventory by $105,000. The released funds are used to pay off short-term creditors.) (Round your inter 3 of 3 Next Q Search or type URL 596.400 Variable expenses Contribution margin Fixed expenses Het operating income Income taxes 401 Net incos 33,600 The company had average operating assets of $491,000 during the year Required: 1. Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider cach question separately, starting in each case from the data used to compute the original ROI in (t) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $106,000. (The released funds are used to pay off short-term creditors) 3. The company achieves a cost savings of $6,000 per year by using less costly materials. 4. The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $126.000. Interest on the bonds is $19,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $5,000 per year. 5. As a result of a more intense effort by sales people, sales are increased by 15%, operating assets remain unchanged. 6. At the beginning of the year, obsolete inventory carried on the books at a cost of $15,000 is scrapped and written off as a loss. 7. At the beginning of the year, the company uses $177,000 of cash received on accounts receivable) to repurchase and retire some of its common stock. Complete this question by entering your answers in the tabsb Required 1 Required 2 Required 3 Required 7 The company achieves a cost savings of $6,000 per year by using less costly materials. (Round your intermediate calculat and final answers to 2 decimal places.) Effect ROL Prev 3 of 3 c c Q Search or type URL

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

Challenges In Advanced Management Accounting

Authors: The Open University

1st.0th Edition

B01D8X506Y

More Books

Students also viewed these Accounting questions

Question

friendliness and sincerity;

Answered: 1 week ago