Posters.com is a small Internet retailer of high-quality posters. The company has $1,000,000 in operating assets and
Question:
Posters.com is a small Internet retailer of high-quality posters. The company has $1,000,000 in operating assets and fixed expense of $150,000 per year. With this level of operating assets and fixed expenses, the company support sales of up to $3,000,000 per year. The company’s contribution margin ratio is 25%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 25 cents.
A family friend has asked your help in analysing the operations of three anonymous companies operating in the same service sector industry.
Supply the missing data in the table below.
Company | |||||
A | B | C | |||
Sales | $9,000,000 | $7,000,000 | $4,500,000 | ||
Net operating income | $ ? | $280,000 | $ ? | ||
Average operating assets | $3,000,000 | $ ? | $1,800,000 | ||
Return on investment (ROI) | 18% | 14% | ? | ||
Minimum required rate of return | |||||
Percentage | 16% | ? | 15% | ||
Dollar amount | $ ? | $320,000 | $ ? | ||
Residual income | $ ? | $ ? | $90,000 |
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer