Assume that the operating results for last year were as follows: Sales $360,000 Less: Variable expenses 144.000 Contribution margin 216,000 Less: Fixed expenses 180.000 Net operating income $ 36,000 a Compute the degree of operating leverage at the current level of sales.
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- Assume a company reported the following results: Sales $ 400,000 Variable expenses 260, e00 Contribution margin Fixed expenses 140,000 40,000 Net operating income S 100, eee Average operating assets $ 450, e00 The return on investment (RO) is closest to: Multiple Choice 88.9% 23.5% O 35.0% 22.2%V. A company’s contribution format income statement for the previous follows: AmountSales P300,000Variable expenses 120,000Contribution margin 180,000Fixed expenses 108,000Net operating income P72,000 Required:a. Compute the company’s degree of operating leverage. b. Using the computed degree of operating leverage, estimate the effect on net operating income of a 5% increase in sales. c. Prepare an income statement using contribution format to verify your answer in (b)XY Company provided you the following data: Average operating assets 120,000 Margin on sales 15% Minimum required rate of return 20% Return on investment 25% Sales 300,000 Turnover 2.50 What is the residual income? (Correct ans: 21,000) need solution
- Assume a company reported the following results: Sales Variable expenses Contribution margin Fixed expenses $ 400,000 268,000 140,000 40,000 $ 100,000 $ 425,000 Net operating income Average operating assets If the company's minimum required rate of return on average operating assets is 16%, its residual income would be: Multiple Choice $33.000. $35.000. $32.000. $34,000Data Sales Net operating income Average operating assets Minimum required rate of return Enter a formula into each of the cells marked with a ? below Review Problem: Return on Investment (ROI) and Residual Income Compute the ROI Margin Turnover ROI Compute the residual income Average operating assets $25,000,000 $3,000,000 $10,000,000 25% Net operating income Minimum required return Residual income ? ? ? ? ? ? ?Use the following information to answer the questions. Company X $ 12,480,000 $ 3,120,000 561,600 8.00% Company Y $ 28,480,000 $ 7,120,000 2$ Company Z $ 20,480,000 $ 5,120,000 532,480 Sales Average operating assets Net operating income Minimum required rate of return $ 512,640 8.50% 10.40% Required: 1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each company. 3. Each company is presented with an investment opportunity that would yield a 9% rate of return. a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment opportunity. b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the investment opportunity. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req ЗA Req 3B Each company is presented with an investment…
- The following selected data for BC Company for 2022: Sales P 2,000,000Variable Costs 1,200,000Traceable Fixed Costs 200,000Average Invested Capital 400,000Capital Charge 15% 1. The residual income amounted to? 2. Assuming the same information in the previous item, the return on investment percentage is?Shalom Company provided you the following data: Net operating income Total liabilities Contribution margin Average operating assets Sales 150,000 350,000 400,000 750,000 800,000 What is the return on investment?Calculate the Operating Leverage for a business given the following data: Sales = $300,000.00 Variable Costs = 75% of Sales Operating Income = $40,000.00 Group of answer choices a. 0 b. 7.500 c. 1.875 d. 1.333
- Shalom Company provided you the following data: Average operating assets 120,000 Margin on sales Minimum required rate of return Return on investment Sales Turnover What is the residual income? 15% 20% 25% 300,000 2.503. RequIred Informatlon The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: $2,300,000 Sales Variable expenses Contribution margin Fixed expenses 1,170,000 Net operating income Average operating assets $ 1,437,500 At the beginning of this year, the company has a $287,500 investment opportunity with the following cost and revenue characteristics: 50% of sales Contribution margin ratio Fixed expenses $4161,000 The company's minimum required rate of return is 15%. 7. If the comnpany pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? < Prev 15. of 15 re to search T12L F4 F5 F7 F11Use the following information to answer the questions. Company X $ 12,480,000 $ 3,120,000 $ Company Y $ 28,480,000 $ 7,120,000 512,640 8.50% Company Z $ 20,480,000 $ 5,120,000 532,480 10.40% Sales Average operating assets Net operating income Minimum required rate of return 561,600 8.00% Required: 1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each company. 3. Each company is presented with an investment opportunity that would yield a 9% rate of return. a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment opportunity. b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the investment opportunity. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg ЗA Req 3B Compute the return on investment (ROI) for each company…