For each of the independent scenarios, indicate the type of responsibility center involved (cost, revenue, profit, or investment).
Cornerstone Exercise 12-13 (Algorithmic)
East Mullett Manufacturing earned operating income last year as shown in the following income statement:
At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000.
For East Mullett Manufacturing, calculate the following:
You may use the attached spreadsheet to help you complete this activity, but you are not required to do so. You will find the spreadsheet by clicking on the link in the drop-down menu above.
Pelak Company had sales of $30,000,000, expenses of $27,600,000, and average operating assets of $6,000,000.
1. Compute the operating income.
2. Compute the margin (as a percent) and turnover ratio.
3. Compute the ROI as a percent.
Exercise 12-21 (Algorithmic)
Park Company provided the following income statement for last year:
At the beginning of last year, Park had $38,650 in operating assets. At the end of the year, Park had $41,350 in operating assets.
Compute ROI. Do not round interim calculations, but do round your final answer to two decimal places. If required, use a minus sign to indicate a negative ROI.
ROI = _________________ %
Links to learning objectives referenced by this question can be accessed in the “Additional Resources” drop-down menu above.
Data follow for the Construction Division of D. Jack Inc.:
Round all answers to two decimal places.
1. Compute the margin (as a percent) and turnover ratios for each year.
2. Compute the ROI as a percent for the Construction Division for each year.