East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $630,000 Cost of goods sold 380,000 Gross margin $250,000 Selling and administrative expense 174,400 Operating income $ 75,600 Less: Income taxes (@ 40%) 30,240 Net income $ 45,360 Total capital employed equaled $394,000. East Mullett's actual cost of capital is 8 percent. Required: Calculate the EVA for East Mullett Manufacturing.
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- During the current year. Plainfield Manufacturing earned income of $845,000 from total sales of $9,350,000 and average capital assets of $13,500,000. What is the sales margin?During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of $5,500,000 and average capital assets of $12,000,000. A. Based on this information, calculate asset turnover. B. Using the sales margin from the previous exercise, what is the total ROI for the company during the current year?During the current year, Plainfield Manufacturing earned income of $845,000 from total sales of $9,350,000 and average capital assets of $13,500,000. Using the sales margin from the previous exercise, what is the total ROI for the company during the current year?
- Calculating Average Operating Assets, Margin, Turnover, and Return on Investment East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $3,750,000 Cost of goods sold 2,250,000 Gross margin $1,500,000 Selling and administrative expense 1,200,000 Operating income $ 300,000 Less: Income taxes (@ 40%) 120,000 Net income $ 180,000 At the beginning of the year, the value of operating assets was $1,600,000. At the end of the year, the value of operating assets was $1,400,000. Round your answers to two decimal places, when rounding is required. What is the average operating assetsCalculating Average Operating Assets, Margin, Turnover, and Return on Investment East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $3,750,000 Cost of goods sold 2,250,000 Gross margin $1,500,000 Selling and administrative expense 1,200,000 Operating income $ 300,000 Less: Income taxes (@ 40%) 120,000 Net income $ 180,000 At the beginning of the year, the value of operating assets was $1,600,000. At the end of the year, the value of operating assets was $1,400,000. Round your answers to two decimal places, when rounding is required. Required: For East Mullett Manufacturing, calculate: 1. Average operating assets $fill in the blank 1 2. Margin fill in the blank 2 % 3. Turnover fill in the blank 3 4. Return on investment fill in the blank 4 %East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $630,000 Cost of goods sold 380,000 Gross margin $250,000 Selling and administrative expense 174,400 Operating income $ 75,600 Less: Income taxes (@ 40%) 30,240 Net income $ 45,360 Total capital employed equaled $419,000. East Mullett's actual cost of capital is 8 percent. Required: Calculate the EVA for East Mullett Manufacturing.
- Calculating Economic Value Added East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $630,000 Cost of goods sold 380,000 Gross margin $250,000 Selling and administrative expense 174,400 Operating income $ 75,600 Less: Income taxes (@ 40%) 30,240 Net income $ 45,360 Total capital employed equaled $399,000. East Mullett's actual cost of capital is 8 percent. Required: Calculate the EVA for East Mullett Manufacturing.$fill in the blank 1Calculating Residual Income East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $3,750,000 Cost of goods sold 2,250,000 Gross margin $1,500,000 Selling and administrative expense 1,200,000 Operating income $ 300,000 Less: Income taxes (@ 40%) 120,000 Net income $ 180,000 At the beginning of the year, the value of operating assets was $1,600,000. At the end of the year, the value of operating assets was $1,400,000. East Mullett requires a minimum rate of return of 5%. What is the residual income?The income statement for Huerra Company for last year is provided below: Total Unit Sales $ 43,200,000 $ 432.00 Less: Variable expenses 25,920,000 259.20 Contribution margin 17,280,000 172.80 Less: Fixed expense 8,640,000 86.40 Net operating income 8,640,000 86.40 Less: Income taxes @ 30% 2,592,000 25.92 Net income $ 6,048,000 $ 60.48 The company had average operating assets of $18,000,000 during the year. Required: 1. Compute the company’s ROI for the period using the ROI formula stated in terms of margin and turnover. (Round intermediate calculation to 2 decimal places. Enter your percentage answer rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 2. Consider each of the following questions separately and then compute the new ROI figure. Indicate whether the ROI will increase, decrease, or remain unchanged as a result of the events described. a. By using JIT, the company is able to…
- The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 998,000 $ 49.90 Variable expenses 598,800 29.94 Contribution margin 399,200 19.96 Fixed expenses 321,200 16.06 Net operating income 78,000 3.90 Income taxes @ 40% 31,200 1.56 Net income $ 46,800 $ 2.34 The company had average operating assets of $508,000 during the year. Required: 1. Compute the company’s return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $109,000. (The…Calculating Residual Income East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $531,250 Cost of goods sold 280,000 Gross margin $251,250 Selling and administrative expense 190,000 Operating income $61,250 Less: Income taxes (@ 40%) 24,500 Net income $36,750 At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000. East Mullett requires a minimum rate of return of 10%. Required: For East Mullett, calculate: 1. Average operating assets 2. Residual incomeThe contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 998,000 $ 49.90 Variable expenses 598,800 29.94 Contribution margin 399,200 19.96 Fixed expenses 321,200 16.06 Net operating income 78,000 3.90 Income taxes @ 40% 31,200 1.56 Net income $ 46,800 $ 2.34 The company had average operating assets of $508,000 during the year. 3. The company achieves a cost savings of $6,000 per year by using less costly materials.