At the beginning of this year, the company has a $275,000 investment opportunity with the following co characteristics: Sales $ 440,000 Contribution margin ratio 60 % of sales $ 220,000 Fixed expenses The company's minimum required rate of return is 15%. ■ndational 10-4 (Algo) hat is the margin related to this year's investment opportunity? gin 15%
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![The Foundational 15 (Algo) [LO10-1, LO10-2]
[The following information applies to the questions displayed below.]
Westerville Company reported the following results from last year's operations:
Sales
Variable expenses
Contribution margin
Fixed expenses
$ 2,200,000
660,000
1,540,000
1,100,000
Net operating income
Average operating assets
$ 440,000
$ 1,375,000
At the beginning of this year, the company has a $275,000 investment opportunity with the following cost and revenue
characteristics:
Sales
$ 440,000
Contribution margin ratio
Fixed expenses
60 % of sales
$ 220,000
The company's minimum required rate of return is 15%.
oundational 10-4 (Algo)
What is the margin related to this year's investment opportunity?
Margin
15%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbdbf71b8-a2ac-4dec-af1f-ae39af0c4f4c%2F13828519-a25b-495c-a1d3-788ca888d91f%2F99s2i6j_processed.png&w=3840&q=75)
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- Oreo reported the following for the period:Sales P1,000,000Cost of Sales P300,000Operating expenses P100,000Determine the OSD assuming that Oreo is a corporation10. In 2021, Segment X of Special Company had sales of P5,000,000 (represents 30% of the total company’s sales), and had traceable costs of P3,200,000. Special also incurred segments costs of P400,000 that were not traceable to any of the divisions. Segment X incurred impairment loss of P600,000, an amount which is considered material. What amount should be reported as Segment X’s profit for 2021? A. 1,800,000 B. 1,680,000 C. 1,080,000 D. 800,000 E. None of them10. Taylor Company, a publicly owned entity, assesses performance and makes operating decisions using the following information for its reportable segments: Total revenue, P7,680,000; Total profit and loss, P406,000. The total profit and loss included intersegment profit of P61,000. In addition, Taylor has P5,000 of common costs for its reportable segments that are not allocated in reports reviewed by the chief operating decision maker. What amount should Taylor report as segment profit? a. 350,000 b. 345,000 c. 411,000 d. 406,000
- The AAA Division has permanent current assets of P50,000 and operating non-current assets of 350,000. It provides annual operating income after tax of P100,000. Its cost of capital is 15% but the minimum required rate of return by the entity is 16%. 1. How much is its current return on investment? 2. How much is its economic value added? 3. How much is its residual income? 4. Assume that the Senna Division is presented by the head office to manage a P60,000 investment option yielding a 20% return on its investment. Should the Division agree to manage this investment opportunity? A. Yes, because the ROI will increase. B. Yes, because the RI and EVA will increase. C. No, because the ROI will decrease. D. No, because the RI and EVA will decrease.The following results are available for Division X and Y:Division X Division YProfit before interest and tax P185 000 P172, 000Capital employed P1, 540, 000 P1, 650, 000The cost of capital is 10%.Calculate and comment on the performance of the departments based on:a. Return on capital employed (4 marks)b. Residual incom. Using a MARR of 15%, the preferred Alternative is:TABLE P6-82 Data for Problems 6-82 through 6-85 A B C D ECapital investment $60,000 $90,000 $40,000 $30,000 $70,000Annual expenses 30,000 40,000 25,000 15,000 35,000Annual revenues 50,000 52,000 38,000 28,000 45,000Market value at EOY 10 10,000 15,000 10,000 10,000 15,000IRR ??? 7.4% 30.8% 42.5% 9.2%(a) Do nothing (b) Alt. A (c) Alt. B(d) Alt. C (e) Alt. D (f) Alt. E
- The following are available for divison X and Y Profit before interest and tax X 185 000 Y172 000 Capital employed X 1 540 000 Y 1 650 000 The cost of capital is 10% comment on the performance of the departments based on a. Return on capital employed b.residual income13. Refer to the following financial information of Scholz Company: NOPAT 8,250,000.00 EBITDA 17,725,000.00 Net Income 5,050,000.00 Capital Expenditures 6,820,000.00 After tax capital costs 6,280,000.00 Tax rate 40% Calculate the Company’s depreciation and amortization expense12 The following costs were incurred by ABCDEFGH, Inc.. during 2020: July 1 Organization fees P120,000 July 2 Land site and old building 1,890,000 July 3 Option payments 250,000 July 20 Broker’s fees on property acquired 110,400 July 30 Cost of remodeling the building 60,000 August 30 Salaries of executives 360,000 December 21 Real property taxes 240,000 Additional information: The building acquired had a fair value of P450,000 while the land was currently appraised at P1,800,000 P50,000 of the option money paid were for properties not acquired. The executives had no participation on the remodeling of the building The property taxes were for the 2020 calendar year. How much is the cost of land? Group of answer choices 1,856,320 1,992,320 1,512,000 2,288,000
- 10. If the net income after tax of the company is P4,000,000, starting balance of assets is P500,000 and the ending balance of assets is P700,000, what is the return of assets? *a. 8b. 5.71c. 6.6667d. 3.3333 2. If the quick assets of the company amounted to P90,000, and the quick ratio is 9, how much is the current liabilities of the entity? *a. P810,000b. P89,997c. P90,009d. P10,000 7. If net sales amounted to P200,000, net income before tax is P80,000 and the income tax rate is 30%, how much is the profit margin ratio? *a. 0.40b. 0.28c. 2.5d. 3.57 8. Interest expense for the year amounted to P90,000. Income tax expense is P100,000. If net income after tax is P620,000, what is the times interest earned ratio? *a. 6.2b. 9c. 6.888d. P720,000 1. If current assets amounted to P600,000 and current liabilities amounted to P200,000, what is the current ratio of the entity? *a. P800,000b. P400,000c. 3d. 1/3 3. If net sales is P200,000 and the average accounts receivable is P50,000, what is…Killian Corp. has a residual income of $36,000 on invested assets of $451,000. If the hurdle rate is 10%, what is the operating income?A.) 3,600B.) 45,100C.) 81,100D.) 36,000Global Imex has two divisions; one located at Accra and the other in Takoradi.The following is an extract from the annual report for the 2010 financial year ACCRA TAKORADI Profit Before Depreciation 450,000 620,000 Depreciation 120,000 130,000 Non Current Assets 1,200,000 1,300,000 Current Assets 750,000 1,000,000 Current Liabilities 350,000 400,000 Cost of Capital is 20% Required (i) Using Return on Investment (ROI) and Residual Income, comment on the performance of the divisions.(ii) The Takoradi branch intends to sell one of the non-current assets with book value of GH¢120,000. This asset generates a profit of GH¢60,000. Accra also wants to acquire another asset costing GH¢90,000 that will generate a profit of GH¢40,000. To what extent will the decisions affect the performance of the divisions?