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Kaler Company has sales of $1,290,000, cost of goods sold of $755,000, other operating expenses of $168,000, average invested
2. Several possible changes that Kaler could face in the upcoming year follow. Determine each scenarios impact on Kalers RO
c. Operating expenses decrease by 10 percent. Return on Investment Residual Income (Loss) d. Average invested assets decrease
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Answer #1

Retem on investment Investment turnover profit margin Residual income close 100% 003395 Time 28 of $(51000) - computation ofprofit margin = Net operating ancome 100 sales $367000 x 100 $ 1290,000 TResideal ancome = Net operating income to I minamumb) operating expenses ancreases by $77000! Net operating income - $367000 e operatana expenses- $ (77000) - Net operating ancas a nuested assets ancreases by $ 325000 - Revised assets = $38.00.000t $325000 - = $ 4125000 mongmens required rate of retu

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