Question

he following data are available for a foundry operation started as a new company four years ago when the construction cost index was 125

current liabilities $170000

operating income $176200

NBV long term assets (end year 3) $687500

current assets $300000

GROSS BOOK VALUE $1100000

estimated total useful life 8 years

Age of assets 4 years

construction cost index end of year 4 150

of long term assets at historical cost

what is the year 4 operating income using year 4 current cost amortization ?

1-$176200

2-73700

3-18700

4-($126300)

5-$148700

question 6

which of the following is the least typical balanced scorecard measure ?

1- customer satisfaction measures

2-innovation measures

3-time measures

4-direct materials measure

5-profitability measures

question 6

which type of compensation is most prevalent when a satisfactory performance measure cannot be designed ?

1-dividends

2-salary

3-bonus based on ROI

4-stock options

5-bonus based on ROI and /or RI

question 7

which two ratios are used in the Dupont method of profitability analysis to create return on assets ?

1-profit margin and asset turnover

2-profit margin and operating leverage

3-return on sales and return on assets

4-asset turnover and return on investment

5-profit margin and return on sales

Answer 1

question

which of the following is the least typical balanced scorecard measure ?

Solution

4. direct materials measure

Question

which type of compensation is most prevalent when a satisfactory performance measure cannot be designed ?

solution

1-dividends

question

which two ratios are used in the Dupont method of profitability analysis to create return on assets ?

solution

1-profit margin and asset turnover

4-asset turnover and return on investment

Question

what is the year 4 operating income using year 4 current cost amortization ?

Solution:

LBV at the year end 3	687500
Less: Depreciation	137500	($1100000/8)
LBV at the year end 4	550000

Current cost amortization =$165000 ( $137500*150/125) Therefore difference = $27500($165000-$137500) Therefore operating income = $176200 -$27500 = $148700