Homework Answers
1) ROI = Net Operating Income/Average Operating assets = 45,200/139,000 = 32.5%
2)Residual income= 96,000- (576,000 x 14%) = 15,360
3)Answer -(61,600)
| Keep Product | Drop Product | Difference | |
| Sales | $ 317,100.00 | $ (317,100.00) | |
| Variable Expense | $ 226,500.00 | $ 226,500.00 | |
| Contribution margin | $ 90,600.00 | $ (90,600.00) | |
| Fixed Expense | $ 101,000.00 | $ 72,000.00 | $ 29,000.00 |
| Financial advantage (disadvantage) | $ (10,400.00) | $ (72,000.00) | $ (61,600.00) |
4)
| Direct materials | $ 453,200.00 |
| Direct Labor | $ 409,200.00 |
| Variable Manufacturing overhead | $ 169,400.00 |
| Total relevant cost to make | $ 1,031,800.00 |
| Total cost to buy | $ 1,159,400.00 |
| Cost saved by making the units | $ 127,600.00 |
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Moates Corporation has provided the following data concerning an
investment project that it is considering:
Initial investment
$
390,000
Annual cash flow
$
127,000
per year
Expected life of the project
4
years
Discount rate
8
%
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine
the appropriate discount factor(s) using the tables provided.
The net present value of the project is closest to:
Multiple Choice
$30,624
$(30,624)
$390,000
$(263,000)
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investment project that it is considering:
Initial investment
$
390,000
Annual cash flow
$
127,000
per year
Expected life of the project
4
years
Discount rate
8
%
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine
the appropriate discount factor(s) using the tables provided.
The net present value of the project is closest to:
Multiple Choice
$30,624
$(30,624)
$390,000
$(263,000)
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