Question

BR Company has a contribution margin of 8% Sales are SS65 on investment (RO? net operating income is S45200, and everage operat ng assets are Sonoo. what is ee compar s return 8.46 points Mutiple Cholce 041% 80% 325% 0.2%

Answer 1

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