Earleton Manufacturing Company has $2 billion in sales and $700,000,000 in fixed assets. Currently, the company's fixed assets are operating at 75% of capacity. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet What level of sales could Earleton have obtained if it had been operating at full capacity? Write out your answer completely. Round your answer to the nearest cent. $ fill in the blank 2 If Earleton's sales increase 35%, how large of an increase in fixed assets will the company need to meet

Earleton Manufacturing Company has $2 billion in sales and $700,000,000 in fixed assets. Currently, the company's fixed assets are operating at 75% of capacity. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet What level of sales could Earleton have obtained if it had been operating at full capacity? Write out your answer completely. Round your answer to the nearest cent. $ fill in the blank 2 If Earleton's sales increase 35%, how large of an increase in fixed assets will the company need to meet

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 1CE: Forchen, Inc., provided the following information for two of its divisions for last year: Required:...

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Earleton Manufacturing Company has $2 billion in sales and $700,000,000 in fixed assets. Currently, the company's fixed assets are operating at 75% of capacity. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet What level of sales could Earleton have obtained if it had been operating at full capacity? Write out your answer completely. Round your answer to the nearest cent. $ fill in the blank 2 What is Earleton's target fixed assets/sales ratio? Round your answer to two decimal places. fill in the blank 3% If Earleton's sales increase 35%, how large of an increase in fixed assets will the company need to meet its target fixed assets/sales ratio? Write out your answer completely. Do not round intermediate calculations. Round your answer to the nearest dollar. $ fill in the blank 4
The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as follows (assuming no support department charges): Sales $210,000,000 Cost of goods sold 117,200,000 Gross profit $92,800,000 Administrative expenses 67,400,000 Operating income $25,400,000 The manager of the Consumer Products Division is considering ways to increase the return on investment. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $125,550,000 of assets have been invested in the Consumer Products Division. Round your answers for the profit margin and the rate of return on investment to the nearest whole number, round your answer for the…
Newtown Propane currently has $645,000 in total assets and sales of $1,720,000. Half of Newtown’s total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 22% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is $ Newtown was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? $1,720,000 $1,629,473 $1,448,421 $1,810,526 When you consider that Newtown’s fixed assets were being underused, its target fixed assets to sales ratio should be %. When you consider that Newtown’s fixed assets were being underused, how much fixed assets must Newtown raise to support its expected sales for next year? $41,022 $46,150 $48,714 $51,278
Oscar Clemente is the manager of Forbes Division of Pitt, Inc., a manufacturer of biotech products. Forbes Division, which has $4.08 million in assets, manufactures a special testing device. At the beginning of the current year, Forbes invested $5 million in automated equipment for test machine assembly. The division’s expected income statement at the beginning of the year was as follows. Sales revenue $ 16,120,000 Operating costs Variable 2,100,000 Fixed (all cash) 7,560,000 Depreciation New equipment 1,570,000 Other 1,380,000 Division operating profit $ 3,510,000 A sales representative from LSI Machine Company approached Oscar in October. LSI has for $6.15 million a new assembly machine that offers significant improvements over the equipment Oscar bought at the beginning of the year. The new equipment would expand division output by 10 percent while reducing cash fixed costs by 5 percent. It would be depreciated…
Williams Manufacturing uses scrap metal to produce various tools, such as drill bits, hammer heads, saw blades, and nails. The CEO has asked you to analyze the saw blades division to determine asset turnover for last quarter. You find that the saw blades division had an ROI of 40%, sales of $15.50 million, and operating profits of $0.775 million. What was the asset turnover rate for last quarter?
Williams Manufacturing uses scrap metal to produce various tools, such as drill bits, hammerheads, saw blades, and nails. The CEO has asked you to analyze the saw blades division to determine asset turnover for last quarter. You find that the saw blades division had an ROI of 20%,sales of $10 million, and operating profits of $1 million. What was the asset turnover rate forlast quarter?
Water and Power Co. (W&P) currently has $575,000 in total assets and sales of $1,400,000. Half of W&P’s total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 22% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is . (Note: Round your answer to the nearest whole number.) W&P was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? (Note: Round your answer to the nearest whole number.) $1,547,368 $1,768,421 $1,473,684 $1,694,737 When you consider that W&P’s fixed assets were being underused, its target fixed assets to sales ratio should be %. (Note: Round your answer to two decimal places.) When you consider that W&P’s fixed assets were being underused, how much fixed assets must W&P raise to…
Owen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Balance Sheet(in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 14 Accounts payable $ 25 Accounts receivable 30 Accrued wages 12 Inventory 31 Accrued taxes 16 Current assets $ 75 Current liabilities $ 53 Fixed assets 48 Notes payable 20 Common stock 23 Retained earnings 27 Total assets $ 123 Total liabilities and stockholders' equity $ 123 Owen’s Electronics has an aftertax profit margin of 7 percent and a dividend payout ratio of 40 percent. If sales grow by 30 percent next year, determine how many dollars of new funds are needed to finance…
Owen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Balance Sheet (in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 15 Accounts payable $ 17 Accounts receivable 31 Accrued wages 3 Inventory 32 Accrued taxes 12 Current assets $ 78 Current liabilities $ 32 Fixed assets 46 Notes payable 15 Common stock 18 Retained earnings 59 Total assets $ 124 Total liabilities and stockholders' equity $ 124 Owen’s Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 45 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to finance the growth. (Do not round intermediate calculations. Enter…
Redline Publishers, Inc. creates a wide range of publications, from computer software instruction manuals to guides detailing how to set up and run massive industrial machines. The company's financial statement showed total assets of $62 million and total liabilities of $40 million as of the end of the previous year.. There was an increase of around 3 percent from the previous year in the income statement's net income of $1.1 million for 2016. The company's effective tax rate is 30%. Several investments were made to upgrade the production equipment of the firm at the end of 2016. The company's materiality level for such expenses is $750, hence none of these expenses were capitalized. Despite the fact that the overhauls prolonged the equipment's useful life, the costs were deducted rather than capitalized. The controller of the corporation, John Henderson, is concerned about how the overhaul costs will be handled. Despite the fact that no one expense went beyond the'materiality'…
Owen’s Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Balance Sheet(in $ millions) Assets Liabilities and Stockholders' Equity Cash $ 7 Accounts payable $ 20 Accounts receivable 25 Accrued wages 7 Inventory 28 Accrued taxes 13 Current assets $ 60 Current liabilities $ 40 Fixed assets 45 Notes payable 15 Common stock 20 Retained earnings 30 Total assets $ 105 Total liabilities and stockholders' equity $ 105 Owen’s Electronics has an aftertax profit margin of 10 percent and a dividend payout ratio of 45 percent. If sales grow by 20 percent next year, determine how many dollars of new funds are needed to…
Forchen, Inc., provided the following information for two of its divisions for last year: Required: 1. For the Small Appliances Division, calculate: a. Average operating assets b. Margin c. Turnover d. Return on investment (ROI) 2. For the Cleaning Products Division, calculate: a. Average operating assets b. Margin c. Turnover d. Return on investment (ROI) 3. What if operating income for the Small Appliances Division was 2,000,000? How would that affect average operating assets? Margin? Turnover? ROI? Calculate any changed ratios (round to four significant digits).