Selected data from Kemp Corporation are reproduced below:

Required:
a. For Year 4, compute the following ratios:
(1) Inventory/Sales.
(2) Inventory/Income contribution.
b. Compute the percentage of each product line’s income contribution to the total for each year. Interpret this evidence.
c. Comment on the desirability of an investment in each productline.

Transcribed Image Text:

KEMP CORPORATION Product-Line Information (S thousands) Year 1 Year 2 Year 3 Year 4 Data communications equipment $4,847 996 2,103 $4,616 Net sales Income contribution Inventory $5,630 $6,890 1,510 1,897 2,615 2,469 Time recording devices Net sales Income contribution Inventory 3,394 441 1,193 4,200 311 2 234 4376 34 2,574 4,100 412 2,728 Hardware for electronics industry 1,564 Net sales income contribution. .-······ Inventory $1,850 919 287 . 331 Home sewing products $1,505 291 398 $1,436 289 Net sales 1,265 342 526 Inventory 449 Corporate totals Net sales Income contribution Inventory 9,515 1,302 4,206 11,266 1,476 5,237 12,195 2,077 5,457 14,105 3,183 5,438