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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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Return on Investment, Margin, Turnover

Data follow for the Consumer Products Division of Kisler Inc.:

Chapter 11, Problem 28E, Return on Investment, Margin, Turnover Data follow for the Consumer Products Division of Kisler

(Note: Round all answers to two decimal places.)

Required:

  1. 1. Compute the margin and turnover ratios for each year.
  2. 2. Compute the ROI for the Consumer Products Division for each year.

1.

To determine

Calculate margin and turnover ratios for each year.

Explanation

Margin:

The Proportion of operating income to the amount of sales revenue is known as margin. It represents the proportion of sales revenue left, to cover taxes, interest, and profit.

Turnover:

Turnover can be defined as the amount of dollar sales earned by the company from investing every dollar in the operating assets. It is computed by dividing the amount of sales by the average operating assets.

The following table represents the calculation of the margin:

 Year 1 ($)Year 2 ($)
Operating income (A)9,210,0007,900,000
Sales (B)92,100,00098,750,000
Margin (AB)0

2.

To determine

Calculate ROI for each year.

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