Computation of Contribution Income Statement | |
Particular | Amount (in 000) |
Unit Sold | 3400000 |
Sales Price | $226,000.00 |
Less: Variable Expense | |
Variable cost of Goods Sold | -$115,700.00 |
Selling Expense ( 19800/3) | -$6,600.00 |
Contribution | $103,700.00 |
Less: Fixed Expense | |
Fixed Selling Expense (19800*2/3) | -$13,200.00 |
Fixed Admin Expense | -$23,000.00 |
Net Income | $67,500.00 |
Part-1 Computation of Unit Contribution Margin | |
Total Contribution Margin (a) | $103,700,000.00 |
Unit Sold (b) | 3400000 |
Contributon per Unit (a/b) | $30.50 |
Part-2 (a) Computation of Pretax ROI | |
Income from Operation before tax (a) | $67,500,000.00 |
Average Asset Employes (b) | $399,000,000.00 |
Pretax ROI =(a/b) | 16.92% |
Part-2 (b) Computation of Pretax ROI | |
Income from Operation before tax (a) | $67,500,000.00 |
Average Asset Employes (b) | $399,000,000.00 |
Minimum Return ( C) | 13.00% |
Expected Return (d=bXc) | $51,870,000.00 |
Residual Incom ( a-d) | $15,630,000.00 |
Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reigis Steel...
Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reigis Steel Division Consolidated monitors its divisions on the basis of both unit contribution and return on investment (ROI), with investment defined as average operating assets employed. All investments in operating assets are expected to earn a minimum return of 12% before income taxes Relgis's cost of goods sold is considered to be entirely variable, however, its administrative expenses do not depend on volume Selling expenses...
Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reigis Steel Division. Consolidated monitors its divisions on the basis of both unit contribution and return on investment (ROI), with investment defined as average operating assets employed. All investments in operating assets are expected to earn a minimum return of 10% before income taxes. Reigis's cost of goods sold is considered to be entirely variable; however, its administrative expenses do not depend on volume. Selling expenses...
Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reigis Steel Division. Consolidated monitors its divisions on the basis of both unit contribution and return on investment (ROI), with investment defined as average operating assets employed. All investments in operating assets are expected to earn a minimum return of 12% before income taxes. Reigis’s cost of goods sold is considered to be entirely variable; however, its administrative expenses do not depend on volume. Selling expenses...
Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reigis Steel Division. Consolidated monitors its divisions on the basis of both unit contribution and return on investment (ROI), with investment defined as average operating assets employed. All investments in operating assets are expected to earn a minimum return of 12% before income taxes. Reigis’s cost of goods sold is considered to be entirely variable; however, its administrative expenses do not depend on volume. Selling expenses...
Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reigis Steel Division. Consolidated monitors its divisions on the basis of both unit contribution and return on investment (ROI), with investment defined as average operating assets employed. All investments in operating assets are expected to earn a minimum return of 12% before income taxes. Reigis’s cost of goods sold is considered to be entirely variable; however, its administrative expenses do not depend on volume. Selling expenses...
Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reigis Steel Division. Consolidated monitors its divisions on the basis of both unit contribution and return on investment (ROI), with investment defined as average operating assets employed. All investments in operating assets are expected to earn a minimum return of 11% before income taxes. Reigis’s cost of goods sold is considered to be entirely variable; however, its administrative expenses do not depend on volume. Selling expenses...
ROI, Residual Income Raddington Industries produces tool and die machinery for manufacturers. The company expanded vertically in 20x1 by acquiring one of its suppliers of alloy steel plates, Keimer Steel Company. To manage the two separate businesses, the operations of Keimer are reported separately as an investment center. Raddington monitors its divisions on the basis of both unit contribution and return on average investment (ROI), with investment defined as average operating assets employed. Management bonuses are determined on ROI. All...
ROI, Residual Income Raddington Industries produces tool and die machinery for manufacturers. The company expanded vertically in 20x1 by acquiring one of its suppliers of alloy steel plates, Keimer Steel Company. To manage the two separate businesses, the operations of Keimer are reported separately as an investment center. Raddington monitors its divisions on the basis of both unit contribution and return on average investment (ROI), with investment defined as average operating assets employed. Management bonuses are determined on ROI. All...
The vice president of operations of Recycling Industries is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Business Division Consumer Division Sales $2,200,000 $2,490,000 Cost of goods sold 1,260,000 1,335,000 Operating expenses 698,000 831,300 Invested assets 1,100,000 2,490,000 1. Prepare condensed divisional income statements for the year ended December 31, 20Y8, assuming that there were no service department charges. Recycling Industries...
Ignacio, Inc., had after-tax operating income last year of $1,198,000. Three sources of financing were used by the company: $2 million of mortgage bonds paying 4 percent interest, $4 million of unsecured bonds paying 6 percent interest, and $11 million in common stock, which was considered to be relatively risky (with a risk premium of 8 percent). The rate on long-term treasuries is 3 percent. Ignacio, Inc., pays a marginal tax rate of 30 percent. Required: 1. Calculate the after-tax...