Homework Answers
| Small Appliances | Cleaning Products | ||
| Division | Division | ||
| I | Sales | 34670000 | 29000000 |
| II | Operating income | 2773600 | 1160000 |
| III | Operating Assets,January 1 | 6394000 | 5600000 |
| IV | Operating Assets,December 31 | 7474000 | 6000000 |
| V | Average Operating assets[(III+IV)/2] | 6934000 | 5800000 |
| VI | Margin(II/I) | 8.00% | 4.00% |
| VII | Turnover(I/V) | 5 | 5 |
| VIII | ROI(Vi*VII) | 40% | 20% |
| ROI under changed circumstances | |||
| Small Appliances | |||
| Division | |||
| I | Sales | 34670000 | |
| II | Operating income | 1733500 | |
| III | Operating Assets,January 1 | 6394000 | |
| IV | Operating Assets,December 31 | 7474000 | |
| V | Average Operating assets[(III+IV)/2] | 6934000 | |
| VI | Margin(II/I) | 5.00% | |
| VII | Turnover(I/V) | 5 | |
| VIII | ROI(Vi*VII) | 25% | |
| Average operating assets will not be changed | |||
| Margin will be reduced by 3%(from 8% to 5%) | |||
| Turnover will not be changed | |||
| ROI will be reduced by 15%(from 40% to 25%) | |||
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Calculating Average Operating Assets, Margin, Tumover, Return on Investment (ROI) Forchen, Inc., provided the following information...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales Operating income Operating assets, January 1 Operating assets, December 31 Required 1. For the Small Appliances Division, calculate a. Average operating assets6,934,000 b. Margirn C. Turnover d. Return on investment (ROI) 2. For the Cleaning Products Division, calculate: a. Average operating assets5,800,000 b. Margirn C. Turnover d. Return on...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales $34,670,000 $31,320,000 Operating income 2,773,600 1,252,800 Operating assets, January 1 6,394,000 5,600,000 Operating assets, December 31 7,474,000 6,000,000 Required: 1. For the Small Appliances Division, calculate: a. Average operating assets $ 6,934,000 b. Margin c. Turnover d. Return on investm nent (ROI) 2. For the Cleaning Products Division, calculate:...
Calculating Average Operating Assets, Margin, Turnover, Return on investment (RON) Forchen, in provided the following information...
Calculating Average Operating Assets, Margin, Turnover, Return on investment (RON) Forchen, in provided the following information for two of its divisions for last year Small Appliances Cleaning Products Division Division $34,670,000 $31,320,000 Operating come 2.77600 Operating assets, Lanuary 1 6,394,000 5,600,000 Operating assets, December 31 7,474,000 6,000,000 Required: 1. For the Small Appliances Division, calculate a. Average operating a s s Mar c. Turnover d. Return on investment (RON) 2. For the Cleaning Products D ona te: Round your turnover...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales $34,610,000 $31,390,000 Operating income 2,637,100 1,252,200 Operating assets, January 1 6,391,000 5,600,000 Operating assets, December 31 7,530,000 6,800,000 Forchen, Inc., requires an 6 percent minimum rate of return. Required: 1. Calculate residual income for the Small Appliances Division. 2. Calculate residual income for the Cleaning Products Division. 3. What if the minimum required rate of return...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last year: Sales Operating income Operating assets, January 1 Operating assets, December 31 Small Appliances Cleaning Products Division Division $34,650,000 $31,380,000 2,406,200 1,252,800 6,397,000 5,710,000 7,500,000 6,700,000 Forchen, Inc., requires an 6 percent minimum rate of return. Required: 1. Calculate residual income for the Small Appliances Division. $ 2. Calculate residual income for the Cleaning Products Division. 3. What if the minimum required rate of...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Division Cleaning Products Division Sales $34,650,000 $31,320,000 Operating income 2,276,900 1,252,300 Operating assets, January 1 6,398,000 5,760,000 Operating assets, December 31 7,530,000 6,700,000 Forchen, Inc., requires an 6 percent minimum rate of return. Required: 1. Calculate residual income for the Small Appliances Division. $ 2. Calculate residual income for the Cleaning Products Division. $ 3. What if the minimum required...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Division Cleaning Products Division Sales $34,620,000 $31,340,000 Operating income 2,397,700 1,254,300 Operating assets, January 1 6,400,000 5,760,000 Operating assets, December 31 7,590,000 6,640,000 Forchen, Inc., requires an 8 percent minimum rate of return. Required: 1. Calculate residual income for the Small Appliances Division. $ 2. Calculate residual income for the Cleaning Products Division. $
Mastery Problem: Return on Investment, margin, and turnover Return on Investment (ROI) The manager of an...
Mastery Problem: Return on Investment, margin, and turnover Return on Investment (ROI) The manager of an investment center should be evaluated based on revenues, costs, and investments. An evaluation based on net income ignores the amount of investment the investment center required. One way to measure operating profit in relation to investment is a calculation called the return on investment. One formula for calculating return on investment is: Operating income Invested Assets ROI is effective because it takes into consideration...
Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for...
Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: Sales $893,070,000 Less: Variable expenses 546,442,000 Contribution margin $346,628,000 Less: Fixed expenses 198,614,000 Operating income $148,014,000 At the beginning of last year, Elway had $38,632,000 in operating assets. At the end of the year, Elway had 541,363,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin (as a percent) and turnover ratios for last year. If required,...
Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for...
Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: Sales $786,640,000 Less: Variable expenses 543,024,000 Contribution margin $243,616,000 195,036,000 Less: Fixed expenses Operating income $48,580,000 At the beginning of last year, Elway had $38,624,000 in operating assets. At the end of the year, Elway had $41,371,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin (as a percent) and turnover ratios for last year. If required,...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales Operating income Operating assets, January 1 Operating assets, December 31 Required 1. For the Small Appliances Division, calculate a. Average operating assets6,934,000 b. Margirn C. Turnover d. Return on investment (ROI) 2. For the Cleaning Products Division, calculate: a. Average operating assets5,800,000 b. Margirn C. Turnover d. Return on...
Calculating Average Operating Assets, Margin, Turnover, Return on Investment (ROI) Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales $34,670,000 $31,320,000 Operating income 2,773,600 1,252,800 Operating assets, January 1 6,394,000 5,600,000 Operating assets, December 31 7,474,000 6,000,000 Required: 1. For the Small Appliances Division, calculate: a. Average operating assets $ 6,934,000 b. Margin c. Turnover d. Return on investm nent (ROI) 2. For the Cleaning Products Division, calculate:...
Calculating Average Operating Assets, Margin, Turnover, Return on investment (RON) Forchen, in provided the following information for two of its divisions for last year Small Appliances Cleaning Products Division Division $34,670,000 $31,320,000 Operating come 2.77600 Operating assets, Lanuary 1 6,394,000 5,600,000 Operating assets, December 31 7,474,000 6,000,000 Required: 1. For the Small Appliances Division, calculate a. Average operating a s s Mar c. Turnover d. Return on investment (RON) 2. For the Cleaning Products D ona te: Round your turnover...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales $34,610,000 $31,390,000 Operating income 2,637,100 1,252,200 Operating assets, January 1 6,391,000 5,600,000 Operating assets, December 31 7,530,000 6,800,000 Forchen, Inc., requires an 6 percent minimum rate of return. Required: 1. Calculate residual income for the Small Appliances Division. 2. Calculate residual income for the Cleaning Products Division. 3. What if the minimum required rate of return...
Calculating Residual Income Forchen, Inc., provided the following information for two of its divisions for last year: Sales Operating income Operating assets, January 1 Operating assets, December 31 Small Appliances Cleaning Products Division Division $34,650,000 $31,380,000 2,406,200 1,252,800 6,397,000 5,710,000 7,500,000 6,700,000 Forchen, Inc., requires an 6 percent minimum rate of return. Required: 1. Calculate residual income for the Small Appliances Division. $ 2. Calculate residual income for the Cleaning Products Division. 3. What if the minimum required rate of...
Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: Sales $893,070,000 Less: Variable expenses 546,442,000 Contribution margin $346,628,000 Less: Fixed expenses 198,614,000 Operating income $148,014,000 At the beginning of last year, Elway had $38,632,000 in operating assets. At the end of the year, Elway had 541,363,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin (as a percent) and turnover ratios for last year. If required,...
Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: Sales $786,640,000 Less: Variable expenses 543,024,000 Contribution margin $243,616,000 195,036,000 Less: Fixed expenses Operating income $48,580,000 At the beginning of last year, Elway had $38,624,000 in operating assets. At the end of the year, Elway had $41,371,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin (as a percent) and turnover ratios for last year. If required,...
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