4 Finally, management would use the target fixedRequired level of fixed assets = (Target fixed assets/Sales)(Projected sales)Quantitative Problem 2: Mitchell Manufacturing Company has $1,600,000,000 in sales and $370,000,000 in fixed assets. Currently, the company's fixed assets are operatingat 75% of capacity.a. What level of sales could Mitchell have obtained if it had been operating at full capacity? Do not round intermediate calculations. Round your answer to the nearestdollar.b.What is Mitchell's Target fixed assets/Sales ratio? Do not round intermediate calculations. Round your answer to two decimal places.c. If Mitchell's sales increase by 45%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio? Do not roundintermediate calculations. Round your answer to the nearest dollar.

a. Full capacity sales = Actual sales / % of capacity at which Fixed Assets are operatingFull…

Answered: Required antitative Problem 2: Mitchell…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 3PA: The income statement comparison for Forklift Material Handling shows the income statement for the...

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The income statement comparison for Forklift Material Handling shows the income statement for the current and prior year. A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the residual income for each year. Explain how this compares to your findings in part C.
Finally, management would use the target fixed assets ratio with the projected sales to calculate the firm's required level of fixed assets as follows: Required level of fixed assets = (Target fixed assets/Sales) × Projected sales Mitchell Manufacturing Company has $1,000,000,000 in sales and $230,000,000 in fixed assets. Currently, the company's fixed assets are operating at 75% of capacity. What level of sales could Mitchell have obtained if it had been operating at full capacity? Do not round intermediate calculations. Round your answer to the nearest dollar.$ What is Mitchell's Target fixed assets/Sales ratio? Do not round intermediate calculations. Round your answer to two decimal places. % If Mitchell's sales increase by 50%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio? Do not round intermediate calculations. Round your answer to the nearest dollar.$
Earleton Manufacturing Company has $3 billion in sales and $661,000,000 in fixed assets. Currently, the company's fixed assets are operating at 80% of capacity. a. What level of sales could Earleton have obtained if it had been operating at full capacity? Write out your answers completely. For example, 13 million should be entered as 13,000,000. Round your answer to the nearest dollar.$ ____ b. What is Earleton's target fixed assets/sales ratio? Do not round intermediate calculations. Round your answer to two decimal places. % ____ c. If Earleton's sales increase 30%, 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.$ ____
Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 40% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level, it would have had, had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set? Please explain the process and show calculations.
Last year, YG had P250,000,000 of sales and P100,000,000 of fixed assets, so its FA/Sales ratio was 40%. However, its fixed assets were used at only 75% of capacity. Now, the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Asset/Sales Ratio at the level it would have had it been operating at full capacity. What target FA/Sales ratio should the company set? ANSWER FORMAT: 20%
Last year National Aeronautics had a FA/Sales ratio of 40%, comprised of $250 million of sales and $100 million of fixed assets. However, its fixed assets were used at only 60% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set?
Hodgkiss Mfg., Inc., is currently operating at only 77 percent of fixed asset capacity. Fixed assets are $400,400. Current sales are $520,000 and projected to grow to $736,104. How much in new fixed assets are required to support this growth in sales? Assume the company wants to operate at full capacity.
Seaweed MFG, INC. is currently operating at only 78 percent of fixed asset capacity. Fixed assets are $401,800. Current sales are $ 490,000 and projected to grow to $ 747,564. How much in new fixed assets are required to support this growth in sales? Assume the company maintains its current operating capacity.
Thorpe Mfg., Inc., is currently operating at only 96 percent of fixed asset capacity. Current sales are $330,000. Suppose fixed assets are $300,000 and sales are projected to grow to $352,000. How much in new fixed assets is required to support this growth in sales?
Water and Power Co. (W&P) had sales of $1,790,000 last year on fixed assets of $345,000. Given that W&P’s fixed assets were being used at only 95% of capacity, then the firm’s fixed asset turnover ratio was x. (Note: Round your answer to two decimal places.) How much sales could Water and Power Co. (W&P) have supported with its current level of fixed assets? (Note: Round your answer to the nearest whole number.) $1,695,790 $1,978,422 $1,884,211 $1,790,000 When you consider that W&P’s fixed assets were being underused, what should be the firm’s target fixed assets to sales ratio? (Note: Round your answer to two decimal places.) 19.23% 17.39% 18.31% 16.48% Suppose W&P is forecasting sales growth of 22% for this year. If existing and new fixed assets are used at 100% capacity, the firm’s expected fixed-assets turnover ratio for this year is _______________ .(Note: Round your answer to…
Water and Power Co. (W&P) had sales of $1,790,000 last year on fixed assets of $345,000. Given that W&P’s fixed assets were being used at only 95% of capacity, then the firm’s fixed asset turnover ratio was x. (Note: Round your answer to two decimal places.) How much sales could Water and Power Co. (W&P) have supported with its current level of fixed assets? (Note: Round your answer to the nearest whole number.) $1,695,790 $1,978,422 $1,884,211 $1,790,000 When you consider that W&P’s fixed assets were being underused, what should be the firm’s target fixed assets to sales ratio? (Note: Round your answer to two decimal places.) 19.23% 17.39% 18.31% 16.48% Suppose W&P is forecasting sales growth of 22% for this year. If existing and new fixed assets are used at 100% capacity, the firm’s expected fixed-assets turnover ratio for this year is _______________ .(Note: Round your answer to…
Colter Steel has $5,300,000 in assets. Temporary current assets $ 2,600,000 Permanent current assets 1,580,000 Fixed assets 1,120,000 Total assets $ 5,300,000 Assume short-term interest rates are 11 percent and long-term rates are 2 percentage points lower than short-term rates. Earnings before interest and taxes are $1,120,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be? Earnings after taxes

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