Chapter 13 & 15 HW BUS 5483

The following data pertain to Dakota Division's most recent year of operations. Income$4,000,000 Sales revenue 50,000,000 Average invested capital 20,000,000 Required: Which of the following ways could improve the Dakota Division's ROI to 25 percent? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Improve the sales margin to 9 percent by increasing income to $11,250,000. Improve the sales margin to 10 percent by increasing income to $5,000,000. Improve the turnover to 2.778 by decreasing average invested capital to $45,000,000. Improve the turnover to 3.125 by decreasing average invested capital to $16,000,000.

-Improve the sales margin to 10 percent by increasing income to $5,000,000. -Improve the turnover to 3.125 by decreasing average invested capital to $16,000,000.

Required information [The following information applies to the questions displayed below.] The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just ended. Sales revenue£2,000,000 Cost of goods sold 1,100,000 Operating expenses 800,000 Average invested capital 1,000,000 £ denotes the British pound sterling, the national monetary unit of Great Britain. If the sales and average invested capital remain the same during the next year, to what level would total expenses have to be reduced in order to improve the firm's ROI to 15 percent?

1,850,000

Required information [The following information applies to the questions displayed below.] The following is cost and production data for the Wave Darter: Per unit Variable manufacturing cost $400 Applied fixed manufacturing cost 250* Absorption manufacturing cost 650 Variable selling and administrative cost 50 Allocated fixed selling and administrative cost 100† Total cost $800 Variable manufacturing cost $400 Variable selling and administrative cost 50 Total variable cost $450 * Based on planned monthly production of 40 units (or 480 units per year). † Rounded. The target profit is $60,000, with planned sales equal to production. Required: Use the general formula for determining a markup percentage to compute the required markup percentage using variable manufacturing cost. (Round your percentage answer to 2 decimal places (i.e., .1234 should be entered as 12.34).)

131.25% ([925 - 400] / 400)

Required information [The following information applies to the questions displayed below.] The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just ended. Sales revenue£2,000,000 Cost of goods sold 1,100,000 Operating expenses 800,000 Average invested capital 1,000,000 £ denotes the British pound sterling, the national monetary unit of Great Britain. 3-a. Assuming that the expenses and cost of goods sold are reduced in order to improve the firm's ROI to 15 percent, compute the firm's new sales margin. 3-b. Show how the new sales margin and the old capital turnover together result in a new ROI of 15 percent.

3-a. 7.5% 3-b. 7.5% x 2 = 15%

Required information [The following information applies to the questions displayed below.] The following data pertain to Lawn Master Corporation's top-of-the-line lawn mower. Variable manufacturing cost $250 Applied fixed manufacturing cost 50 Variable selling and administrative cost 60 Allocated fixed selling and administrative cost ? To achieve a target price of $450 per lawn mower, the markup percentage is 12.5 percent on total unit cost. Required: What is the fixed selling and administrative cost allocated to each unit of Lawn Master's top-of-the-line mower? (Do not round intermediate calculations.)

40 ([250 +50 + 60 + ?] x [100% + 12.5%] = 450)

Required information [The following information applies to the questions displayed below.] The following is cost and production data for the Wave Darter: Per unit Variable manufacturing cost $400 Applied fixed manufacturing cost 250* Absorption manufacturing cost 650 Variable selling and administrative cost 50 Allocated fixed selling and administrative cost 100† Total cost $800 Variable manufacturing cost $400 Variable selling and administrative cost 50 Total variable cost $450 * Based on planned monthly production of 40 units (or 480 units per year). † Rounded. The target profit is $60,000, with planned sales equal to production. Use the general formula for determining a markup percentage to compute the required markup percentage using absorption manufacturing cost. (Round your percentage answer to 2 decimal places (i.e., .1234 should be entered as 12.34).)

42.31% ([925 - 650] / 650)

Required information [The following information applies to the questions displayed below.] Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 5.00 p per unit. Fixed costs are expected to amount to 60,000 p for the year, and all variable manufacturing and administrative costs are expected to be incurred at a rate of 3.00 p per unit. Corrientes has two salespeople who are paid strictly on a commission basis. Their commission is 10 percent of the sales revenue they generate. (Ignore income taxes.) (p denotes the peso, Argentina's national currency. Many countries use the peso as their national currency. On the day this exercise was written, Argentina's peso was worth .104 U.S. dollar.) The Sorde Company has just approached Corrientes to make a special one-time purchase of 10,000 units. These units would not be sold by the sales personnel, and, therefore, no commission would have to be paid. What is the price Corrientes would have to charge per unit on this special order to earn additional profit of 20,000 p? (Enter your answer in pesos.)

5, Required price on special order: Unit contribution margin required on special order=Target additional profitUnit sales volume in special order =20,000p= 2p per unit10,000 Sales price required=Unit variable cost + Required unit contribution margin =3p + 2p = 5p per unit

Required information [The following information applies to the questions displayed below.] Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 5.00 p per unit. Fixed costs are expected to amount to 60,000 p for the year, and all variable manufacturing and administrative costs are expected to be incurred at a rate of 3.00 p per unit. Corrientes has two salespeople who are paid strictly on a commission basis. Their commission is 10 percent of the sales revenue they generate. (Ignore income taxes.) (p denotes the peso, Argentina's national currency. Many countries use the peso as their national currency. On the day this exercise was written, Argentina's peso was worth .104 U.S. dollar.) Required: Suppose management alters its current plans by spending an additional amount of 5,000 p on advertising and increases the selling price to 6.00 p per unit. Calculate the profit on 60,000 units. (Enter your answer in pesos.)

79,000 ([60,000 x 6] - [60,000 x 3] - [10% x {60,000 x 6}] - 60,000 - 5,000)

The following data pertain to Dakota Division's most recent year of operations. Income$4,000,000 Sales revenue 50,000,000 Average invested capital 20,000,000 Assume that the company's minimum desired rate of return on invested capital is 11 percent. Required: Compute Dakota Division's residual income for the year.

Residual Income $1,800,000 Residual income=Investment center income - (Invested capital × Imputed interest rate) =$4,000,000 - ($20,000,000 × 11%) =$1,800,000

Required information [The following information applies to the questions displayed below.] The following data pertain to British Isles Aggregates Company, a producer of sand, gravel, and cement, for the year just ended. Sales revenue £2,000,000 Cost of goods sold 1,100,000 Operating expenses 800,000 Average invested capital 1,000,000 £ denotes the British pound sterling, the national monetary unit of Great Britain. Required: Compute the company's sales margin, capital turnover, and ROI.

Sales Margin 5% ([2,000,000 - 1,100,000 - 800,000] / 2,000,000), Capital Turnover 2 (2,000,000 / 1,000,000), Return on Investment 10% (5% x 2)

The following data pertain to Dakota Division's most recent year of operations. Income$4,000,000 Sales revenue 50,000,000 Average invested capital 20,000,000 Required: Compute Dakota Division's sales margin, capital turnover, and return on investment for the year. (Round "Capital turnover" answer to 1 decimal place.)

Sales Margin 8% (4,000,000 / 50,000 000), Capital Turnover 2.5 (50,000,000 / 20,000,000), Return on Investment 20% (8 x 2.5)

Required information [The following information applies to the questions displayed below.] Illinois Metallurgy Corporation has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. The Fabrication Division's standard variable production cost per unit is $300. The division has no excess capacity, and it could sell all of its components to outside buyers at $380 per unit in a perfectly competitive market. Required: Determine a transfer price using the general rule.

a. Transfer Price 380

Required information [The following information applies to the questions displayed below.] The following data pertain to Lawn Master Corporation's top-of-the-line lawn mower. Variable manufacturing cost $250 Applied fixed manufacturing cost 50 Variable selling and administrative cost 60 Allocated fixed selling and administrative cost ? To achieve a target price of $450 per lawn mower, the markup percentage is 12.5 percent on total unit cost. For each of the following cost bases, develop a cost-plus pricing formula that will result in a target price of $450 per mower: (Round your percentage answers to 2 decimal places (i.e., .1234 should be entered as 12.34).)

a. Variable - 250 + (80% + 250) b. Absorption - 300 + (50% + 300) c. Total - 310 + (45.16% + 310)

Required information [The following information applies to the questions displayed below.] Illinois Metallurgy Corporation has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. The Fabrication Division's standard variable production cost per unit is $300. The division has no excess capacity, and it could sell all of its components to outside buyers at $380 per unit in a perfectly competitive market. What would be the transfer price if the Fabrication Division had excess capacity?

b. Transfer Price 300