Exercise 10-2 (Algo) Residual Income [LO10-2] Juniper Design Limited of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $470,000 on sales of $2,200,000. The company's average operating assets for the year were $2,400,000 and its minimum required rate of return was 14%. Required: Compute the company's residual income for the year. Residual income
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- Exercise 10-2 (Algo) Residual Income [LO10-2] Juniper Design Limited of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $490,000 on sales of $2,000,000. The company's average operating assets for the year were $2,200,000 and its minimum required rate of return was 15%. Required: Compute the company's residual income for the year. Residual incomeI need help with questions 4/5/6A Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five-year period. His annual pay raises are determined by his division’s return on investment (ROI), which has exceeded 21% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Product A Product B Initial investment: Cost of equipment (zero salvage value) $ 210,000 $ 420,000 Annual revenues and costs: Sales revenues $ 290,000 $ 390,000 Variable expenses $ 136,000 $ 186,000 Depreciation expense $ 42,000 $ 84,000 Fixed out-of-pocket operating costs $ 74,000 $ 54,000 The company’s discount rate is 19%. Click here to view Exhibit 8B-1 and Exhibit 8B-2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period for each product. (Round your answers to 2 decimal places.)…Exercise 14-46 (Algo) Compare ROI Using Net Book and Gross Book Values (LO 14-2, 5) The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $40.0 million and having a four-year expected life, after which the assets can be salvaged for $8.0 million. In addition, the division has $40.0 million in assets that are not depreciable. After four years, the division will have $40.0 million available from these non depreciable assets. This means that the division has invested $80 million in assets with a salvage value of $48.0 million. Annual operating cash flows are $12.8 million. In computing ROI, this division uses beginning-of-year asset values in the denominator. Depreciation is computed on a straight-line basis, recognizing the salvage values noted. Ignore taxes. Required: a. & b. Compute ROI, using net book value and gross book value. Note: Enter your answers as a percentage rounded to 2 decimal place (i.e., 32.10). Year 1 Year 2 Year 3…
- 12. Z Division of XYZ Corp. has the following information for 2002: Assets available for $1,800,000 10% Target rate of return Residual income What was Z Division's return on investment for 2002? (M) a 15% b. 10% $270,000 C. 25% d. 20% BarfieldExercise 11-1 (Algo) Compute the Return on Investment (ROI) [LO11-1] Alyeska Services Company, a division of a major oll company, provides various services to the operators of the North Slope oll field in Alaska. Data concerning the most recent year appear below: Sales Net operating income Average operating assets Required: 1. Compute the margin. Note: Round your answer to 2 decimal places. 2. Compute the turnover. $ 17,400,000 $ 4,700,000 $ 35,200,000 Note: Round your answer to 2 decimal places. 3. Compute the return on Investment (ROI). Note: Round your Intermediate calculations and final answer to 2 decimal places. 1. Margin 2. Turnover 3. ROI %Required information Problem 03.036 DEPENDENT MULTI-PART PROBLEM - ASSIGN ALL PARTS A process for producing the mosquito repellant Deet has an initial investment of $205,000 with annual costs of $55,000. Income is expected to be $90,000 per year. Problem 13.036.b: Calculate the breakeven point What is the annual breakeven production quantity for both payback periods if net profit, that is, income minus cost, is $10 per gallon? When i=0%, the annual breakeven production quantity is determined to be 3504 gallons per year. When 12%, the annual breakeven production quantity is determined to be 1914 gallons per year.
- 4211 1.Return on Investment for Multiple Investments, Residual Income The manager of a division that produces add-on products for the automobile industry has just been presented the opportunity to invest in two independent projects. The first is an air conditioner for the back seats of vans and minivans. The second is a turbocharger. Without the investments, the division will have average assets for the coming year of $29.4 million and expected operating income of $4.335 million. The outlay required for each investment and the expected operating incomes are as follows: Air conditioner Turbocharger Outlay $1,150,000 $540,000 Operating income 90,000 114,080 Required: 1. Compute the ROI for each investment project. Round to the nearest whole percent. Air conditioner, ROI fill in the blank 1 % Turbocharger, ROI fill in the blank 2 % 2. Compute the budgeted divisional ROI for each of the following four alternatives. Round to two decimal places. a. The air…Walden Industries is considering investing in production−management software that costs $620,000, has $60,000 residual value, and leads to cost savings of $2,310,000 per year over its five−year life. Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return. A. $340,000 B. $60,000 C. $680,000 D. $620,000Current Attempt in Progress Your Answer Bonita Industries had sales of $500000, variable costs of $580000, and direct fixed costs totaling $100000. The company's average operating assets total $980000 and its required return is 13%. What is the company's residual income? 4 $372600 $-307400 Correct Answer $452600 O $127400
- Q1 Bongaigaon Refineries wishes to install an air pollution control system in its facility situated in Assam. The system comprises of four types of equipments that involve capital investment and annual recurring costs as given in Table 6.1. Assume a useful life of 10 years for each type of equipment, no salvage value and that the company wants a minimum return of 10% on its capital. Which equipment should be chosen? Table 6.1 Costs for four equipments Investment () Annual recurring costs: Power () Labor (2) Maintenance (2) Taxes and insurance () Total annual recurring costs() A 2,00,000 Equipments B C 2,76,000 3,00,000 D 3,25,000 64,000 59,000 36,000 28,000 1,20,000 1,36,000 1,84,000 1,96,000 96,000 64,000 22,000 10,000 50,000 54,000 68,000 72,000 3,30,000 3,13,000 3,10,000 3,06,000Question 1 UEM Construction Sdn Bhd is considering investing in a new construction equipment costing RM150,000. Its life is expected to be four years and it will have no scrap value at the end of this period. The following details are given relating to the machinery's activities: i, Unit selling price is RM40.00 and unit variable costs of production are: RM Direct materials 6.00 Direct ļabour 3.80 Variable overheads 5.20 ii. Sales volume relating to production of the construction equipment is expected to be: Year Sales Volume (units) 1 2,100 2,200 2,500 2,600 2 3 4 iii. Fixed costs amount to RM12,000 per annum. One quarter of the fixed costs is cash flow related items. iv. The company anticipates a cost of capital to be 10%.10 ts Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump follows: Sales Variable expenses: Variable manufacturing expenses Sales commissions Shipping Total variable expenses Contribution margin Fixed expenses: Advertising (for the bilge pump product line) Depreciation of equipment (no resale value) Thalassines Kataskeves, S.A. Income Statement-Bilge Pump For the Quarter Ended March 31 6 General factory overhead Salary of product-line manager Insurance on inventories Purchasing department Total fixed expenses Net operating loss *Common costs allocated on the basis of machine-hours. tCommon costs allocated on the basis of sales dollars. $ 139,000 55,000 22,000 29,000 107,000 Answer is not complete. $ 95,000 X 43,000* 126,000 13,000 47,000+ Required: What is the financial advantage (disadvantage) of…