Ch 10Cullumber produces and sells two products—aluminum and vinyl. Each of these products is made in a dedicated manufacturing facility, and the product line managers are evaluated based on the product line’s return on investment. The following data is from the most recent year of operations. Aluminum Vinyl Sales $4,800,000 $4,200,000 Variable costs 2,304,000 2,355,000 Direct fixed costs 1,728,000 1,530,000 Average assets 3,200,000 1,500,000 Both product line managers would like to improve their respective returns on investment, and each manager has a differentidea about how to accomplish this. If the aluminum product line manager was able to increase sales volume such that the newasset turnover was 2.20 times, what would be the new operating income? (Round variable cost ratio to 2 decimal places, e.g. 5.25and final answers to0 decimal places, e.g. 12,500.)Operating income$What would be the new return on investment? (Round ROI to 2 decimal places, e.g. 5.12%.)New ROIeTextbook and MediaSave for LaterAttempts: 0 of 5 used Submit Answer

Operating Income The Calculation of operating income is Sales revenue minus variable cost and fixed…

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Financial Reporting, Financial Statement Analysis and Valuation

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ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

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Ch 10

Cullumber produces and sells two products—aluminum and vinyl. Each of these products is made in a dedicated manufacturing facility, and the product line managers are evaluated based on the product line’s return on investment. The following data is from the most recent year of operations.

	Aluminum	Vinyl
Sales	$4,800,000	$4,200,000
Variable costs	2,304,000	2,355,000
Direct fixed costs	1,728,000	1,530,000
Average assets	3,200,000	1,500,000

Both product line managers would like to improve their respective returns on investment, and each manager has a different
idea about how to accomplish this. If the aluminum product line manager was able to increase sales volume such that the new
asset turnover was 2.20 times, what would be the new operating income? (Round variable cost ratio to 2 decimal places, e.g. 5.25
and final answers to0 decimal places, e.g. 12,500.)
Operating income
$
What would be the new return on investment? (Round ROI to 2 decimal places, e.g. 5.12%.)
New ROI
eTextbook and Media
Save for Later
Attempts: 0 of 5 used Submit Answer

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