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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Use the following information for Brief Exercises 11-13 through 11-15:

East Mullett Manufacturing earned operating income last year as shown in the following income statement:

Chapter 11, Problem 13BEA, Use the following information for Brief Exercises 11-13 through 11-15: East Mullett Manufacturing

At the beginning of the year, the value of operating assets was $1,600,000. At the end of the year, the value of operating assets was $1,400,000.

Calculating Average Operating Assets, Margin, Turnover, and Return on Investment

Refer to the information for East Mullett Manufacturing above. Round answers to two decimal places.

Required:

Calculate (1) average operating assets, (2) margin, (3) turnover, and (4) return on investment.

(1)

To determine

Compute average operating assets.

Explanation

Average Operating Assets:

Average operating assets can be determined by adding the beginning assets and ending assets and dividing the result by 2.

Use the following formula to calculate average operating assets:

Average operating assets=(Beginning assets+Ending assets)2

Substitute $1,600,000 for beginning assets and $1,400,000 for ending assets in the above formula

(2)

To determine

Compute the percentage of margin.

(3)

To determine

Compute turnover.

(4)

To determine

Compute return on investment.

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