Question

22 R Wams Comerh 200, and average (RON? a nd Sales 320.000 net operating income is rating assets are $128.000. What is the company return on investment A 25 119 C 27.5% D24% 23 Gru Corporation produces and a single product Data concerning that product appear below Per Unit Percent of Sales Selling price $220 100% Variable expenses 40% Contribution margin 5132 80% Fored expenses are $511,000 per month The company is currently selling 5,000 units per month The marketing manager would like to cut the selling price by S16 and increase the advertising budget by $33.000 per month The marketing manager predicts that these two changes would increase monthly sales by 800 units. What would be the overall effect on the company's monthly net operating income of this change? A Decrease of $59,800 B. Increase of $59,800 C. Increase of $130,200 D. Decrease of $20,200 24. Smythe Corporation has two divisions: North and South Data from the most recent month appear below: North South Sales Variable expenses Traceable foed expenses $156,000 49.920 71.000 $221,000 112,710 85.000 The companys common fred expenses total $54,000. The break-even in sales domars for South Division is closest to A $250.143 B. $387,059 C $173,469 D. $304 265 25. If operating income is $50,000, average operating assets are $240.000, and the minimum required rate of return is 20%, what is the residual income? A. ($11,000) B. $15,000 C. $12,000 D. $48,000

Answer 1

Question No. (22)

Answer -

Step - (1) - Information Given -

Company has a profit margin of 11%.

Sales are $320000.

Net operating income is $35200.

Average operating assets are $128000.

.

Step - (2) - Calculation of Company's Return on investment (ROI)

ROI = Net operating income / Average operating assets

= $35200 / $128000

= 27.5%

Hence, Option - (C) is Correct.