The Tracey Company had the following information for its most recent period:
	Total		Unit		%
Sales	$1,000,000		$50		100%
Variable expenses	600,000		30		60%
Contribution margin	400,000		$20		40%
Fixed expenses	320,000
Net operating income	$80,000
Average operating assets	$500,000
Compute the company's return on investment (ROI) for the period using the ROI
formula stated in terms of margin and turnover.
Net operating income	$80,000		Correct!
Sales	$1,000,000		Correct!
Average operating assets	$500,000		Correct!
Margin	8.00%		Correct!
Turnover	2.0		Correct!
ROI	16.00%		Correct!
Required:
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. Each case is separate so you should return to the original
data for your computations.
Note: Formulas must be used for Margin, Turnover, and ROI. The other cells should be
formulas but I will allow typed in numbers.
(a) The company achieves a cost savings of $10,000 per period by using less costly materials.
Net operating income			Try Again!			Type Increase, Decrease, or
Sales			Try Again!			Unchanged in the space below
Average operating assets			Try Again!
Margin			Try Again!				Try Again!
Turnover			Try Again!				Try Again!
ROI			Try Again!				Try Again!
(b) 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 bank loans.)
Net operating income			Try Again!			Type Increase, Decrease, or
Sales			Try Again!			Unchanged in the space below
Average operating assets			Try Again!
Margin			Try Again!				Try Again!
Turnover			Try Again!				Try Again!
ROI			Try Again!				Try Again!
(c) Sales are increased by $250,000; operating assets remained unchanged. (Remember,
if sales change, so will variable expenses.)
Sales			Try Again!
Variable expenses			Try Again!
Contribution margin			Try Again!
Fixed expenses			Try Again!
Net operating income			Try Again!
Net operating income			Try Again!			Type Increase, Decrease, or
Sales			Try Again!			Unchanged in the space below
Average operating assets			Try Again!
Margin			Try Again!				Try Again!
Turnover			Try Again!				Try Again!
ROI			Try Again!				Try Again!
(d) The company issues bonds and uses the proceeds to purchase $125,000 in machinery
and equipment at the beginning of the period. Sales remain unchanged. The new, more
efficient equipment reduces production costs by $5,000 per period.
Net operating income			Try Again!			Type Increase, Decrease, or
Sales			Try Again!			Unchanged in the space below
Average operating assets			Try Again!
Margin			Try Again!				Try Again!
Turnover			Try Again!				Try Again!
ROI			Try Again!				Try Again!
(e) The company invests $180,000 of cash (received from accounts receivable) in a plot
of land that is to be held for possible future use as a plant site.
Net operating income			Try Again!			Type Increase, Decrease, or
Sales			Try Again!			Unchanged in the space below
Average operating assets			Try Again!
Margin			Try Again!				Try Again!
Turnover			Try Again!				Try Again!
ROI			Try Again!				Try Again!
(f) Obsolete inventory carried on the books at a cost of $20,000 is scrapped and written off
as a loss.
Net operating income			Try Again!			Type Increase, Decrease, or
Sales			Try Again!			Unchanged in the space below
Average operating assets			Try Again!
Margin			Try Again!				Try Again!
Turnover			2.083!				Try Again!
ROI			Try Again!				Try Again!
Note: Cell B101 does not come out even so I wasn't able to do the Correct! or Try Again!
in Cell D101. You should still use a formula in Cell B101 and your answer should be 2.083.

A1 x- Tracey Excel C D E 4 The Tracey Company had the tollowing information for its most recent period 6 Total Unit $50 30 $1,000,000 Sales Variable expenses Contribution margirn Fixed expenses Net operating income 100% 60% 40% 8 600,000 400,000520 320,000 $80,000 Average operating assets $500,000 Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover 17 Net operating income Sales Average operating assets Margin Turnover ROI 80,000 Correct! $1,000,000 Correct! 500,000 Correct! 8.00% Correct! 2.0 Correct! 16.00% Correct! 20 24 25 26 27 Required 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 ROL figure, Each case is separate so vou should return to the original Sheet1