Question
Selected accounting information for the Anderson Company for the past two years is given below: Year 1 Residual income .....................$3,750 Variable costs ......................25% of sales
Selected accounting information for the Anderson Company for the past two years is given below:
Year 1
Residual income .....................$3,750
Variable costs ......................25% of sales
Fixed costs .........................$172,500
Minimum required rate of return.....9%
Year 2
Residual income .....................$74,000
Variable costs ......................60% of sales
Fixed costs .........................$110,000
Minimum required rate of return.....16%
Turnover ............................5
The margin in year 2 was three times larger than
the margin in year 1.
Calculate the following financial metrics:
- Sales revenue in year 2
- Return on investment in year 1
- Return on investment in year 1
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