The following results pertain to an investment center. Sales $ 1,318,800 Variable costs 720,000 Traceable fixed...
The following results pertain to an investment center.
| Sales | $ | 1,318,800 | |
| Variable costs | 720,000 | ||
| Traceable fixed costs | 84,000 | ||
| Average investment | 990,000 | ||
| Divisional cost of capital (discount rate) | 10 | % | |
How much is the residual income (RI) for this investment center?
Homework Answers
Answer:
Meaning of Residual income :
Residual Income is the amount of profit earned above & beyond require the rate of return.
Calculation of Residual Income as follows:
Residual Income = Income - ( Invested Capital * Required rate of return)
= $ 5,14,800 - ( $ 9,90,000 * 10% )
= $ 5,14,800 - $ 99,000
= $ 4,15,800
Therefore, Residual Income is $ 4,15,800
Working note:
Calculation of income as follows:
Income = Sales - Variable fixed cost - Traceable fixed cost
= $ 13,18,800 - $ 7,20,000 - $ 84,000
= $ 5,14,800
Add Answer to:
The following results pertain to an investment center.
Sales
$
1,318,800
Variable costs
720,000
Traceable fixed...
A proposed new investment has projected sales of $720,000. Variable costs are 40 percent of sales,...
A proposed new investment has projected sales of $720,000. Variable costs are 40 percent of sales, and fixed costs are $219,000; depreciation is $100,000. Assume a tax rate of 22 percent. What is the projected net income? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed...
Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $ 1,000,000 300,000 700,000 500,000 200,000 $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and re characteristics: Sales Contribution margin ratio Fixed expenses $ 200,000 60 of sales $ 90,000 The company's minimum required rate of return is 15%. Foundational 10-11 11. What is last year's...
Westerville Company reported the following results from last year’s operations: Sales $ 1,200,000 Variable expenses 320,000...
Westerville Company reported the following results from last year’s operations: Sales $ 1,200,000 Variable expenses 320,000 Contribution margin 880,000 Fixed expenses 640,000 Net operating income $ 240,000 Average operating assets $ 600,000 At the beginning of this year, the company has a $150,000 investment opportunity with the following cost and revenue characteristics: Sales $ 240,000 Contribution margin ratio 50 % of sales Fixed expenses $ 84,000 The company’s minimum required rate of return is 15%. 10-a. If Westerville’s chief executive...
Westerville Company reported the following results from last year’s operations: Sales $ 1,200,000 Variable expenses 320,000...
Westerville Company reported the following results from last year’s operations: Sales $ 1,200,000 Variable expenses 320,000 Contribution margin 880,000 Fixed expenses 640,000 Net operating income $ 240,000 Average operating assets $ 600,000 At the beginning of this year, the company has a $150,000 investment opportunity with the following cost and revenue characteristics: Sales $ 240,000 Contribution margin ratio 50 % of sales Fixed expenses $ 84,000 The company’s minimum required rate of return is 15%. 10-a. If Westerville’s chief executive...
Selected data from Chering Division's accounting records revealed the following: Sales $ 358,600 Average investment $...
Selected data from Chering Division's accounting records revealed the following: Sales $ 358,600 Average investment $ 163,000 Net operating income $ 24,300 Minimum rate of return (divisional cost of capital) 13 % If the minimum rate of return (i.e., cost of capital) was 12%, Chering Division's residual income (RI) would calculate to be: Multiple Choice $2,920. $4,740. $18,732. $9,480. $8,320.
Smith's Chocolates submitted the following results from last year’s operations: Sales $ 11,400,000 Variable expenses 8,180,000...
Smith's Chocolates submitted the following results from last year’s operations: Sales $ 11,400,000 Variable expenses 8,180,000 Contribution margin 3,220,000 Fixed expenses 2,422,000 Net operating income $ 798,000 Average operating assets $ 6,000,000 At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics: Sales $ 2,880,000 Contribution margin ratio 30 % of sales Fixed expenses $ 720,000 The company’s minimum required rate of return is 12%. If the company pursues the investment opportunity, this...
Fox Co. is considering an investment that will have the following sales, variable costs, and fixed...
Fox Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Year 4 Unit sales 3,000 3,250 3,300 3,400 Sales price $17.25 $17.33 $17.45 $18.24 Variable cost per unit $8.88 $8.92 $9.03 $9.06 Fixed operating costs except depreciation $12,500 $13,000 $13,220 $13,250 Accelerated depreciation rate 33% 45% 15% 7% This project will require an investment of $25,000 in new equipment. The equipment will have no salvage value...
Westerville Company reported the following results from last year’s operations: Sales $ 1,200,000 Variable expenses 320,000...
Westerville Company reported the following results from last year’s operations: Sales $ 1,200,000 Variable expenses 320,000 Contribution margin 880,000 Fixed expenses 640,000 Net operating income $ 240,000 Average operating assets $ 600,000 At the beginning of this year, the company has a $150,000 investment opportunity with the following cost and revenue characteristics: Sales $ 240,000 Contribution margin ratio 50 % of sales Fixed expenses $ 84,000 The company’s minimum required rate of return is 15%. 14. If Westerville’s chief executive...
Westerville Company reported the following results from last year’s operations: Sales $ 1,200,000 Variable expenses 320,000...
Westerville Company reported the following results from last year’s operations: Sales $ 1,200,000 Variable expenses 320,000 Contribution margin 880,000 Fixed expenses 640,000 Net operating income $ 240,000 Average operating assets $ 600,000 At the beginning of this year, the company has a $150,000 investment opportunity with the following cost and revenue characteristics: Sales $ 240,000 Contribution margin ratio 50 % of sales Fixed expenses $ 84,000 The company’s minimum required rate of return is 15%. 14. If Westerville’s chief executive...
Selected data from Chering Division's accounting records revealed the following: Sales Average investment Net operating income...
Selected data from Chering Division's accounting records revealed the following: Sales Average investment Net operating income Minimum rate of return (divisional cost of capital) $679, 800 $309,000 $ 55,000 14% Chering Division's residual income (RI) is: Multiple Choice 0 $11,740. 0 $23,480 0 $7,700 0 $17,780 0 $40,172
Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $ 1,000,000 300,000 700,000 500,000 200,000 $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and re characteristics: Sales Contribution margin ratio Fixed expenses $ 200,000 60 of sales $ 90,000 The company's minimum required rate of return is 15%. Foundational 10-11 11. What is last year's...
Selected data from Chering Division's accounting records revealed the following: Sales Average investment Net operating income Minimum rate of return (divisional cost of capital) $679, 800 $309,000 $ 55,000 14% Chering Division's residual income (RI) is: Multiple Choice 0 $11,740. 0 $23,480 0 $7,700 0 $17,780 0 $40,172
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago