Auto Parts is a division of MPI International, located in Wadena, Saskatchewan. Auto Parts manufactures various...

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Auto Parts is a division of MPI International, located in Wadena, Saskatchewan. Auto Parts manufactures various automobile parts, such as bumpers, fenders, and axles, and sells them to major auto manufacturers. The division and its management are evaluated by senior corporate management on the basis of investment centre concepts. The following information pertains to operations of the Auto Parts division for 2021: Operating results: Total revenues Less: Direct variable costs Contribution margin. Less: Direct fixed costs Segment margin Less: Allocated corporate costs. Operating income. Current assets Fixed assets Accumulated depreciation Total operating assets Liabilities Net assets $ 20,150,000 8,295,000 11,855,000 7,245,000 $ 4,610,000 3,802,000 808,000 Book Values December 31, 2020 December 31, 2021 $ 1,204,000 9,868,000 (1,204,000) $ 1,729,000 11,239,000 (1,683,000) $ 9,868,000 $ 11,285,000 $ 2,887,000 $ 3,355,000 $ 6,981,000 $ 7,930,000 Market Values December 31, December 31, 2020 2021 $9,171,000 $ 10,137,000 Required: 1. Compute the margin, turnover, and ROI using operating income and the book value of average total operating assets. (Round "Margin" answer as a percentage rounded to 2 decimal places and other answers to 1 decimal place.) Margin Turnover Return on investment Return on investment 2. Compute ROI using segment margin and average market value of operating assets. (Round your intermediate calculations to 2 decimal places. Enter your percentage answer rounded to 2 decimal place (i.e., 0.1234 should be entered as 12.34).) % % Residual income % 3. Compute RI using operating income and the market value of average net assets. Assume that the required rate of return is 7%. Auto Parts is a division of MPI International, located in Wadena, Saskatchewan. Auto Parts manufactures various automobile parts, such as bumpers, fenders, and axles, and sells them to major auto manufacturers. The division and its management are evaluated by senior corporate management on the basis of investment centre concepts. The following information pertains to operations of the Auto Parts division for 2021: Operating results: Total revenues Less: Direct variable costs Contribution margin. Less: Direct fixed costs Segment margin Less: Allocated corporate costs. Operating income. Current assets Fixed assets Accumulated depreciation Total operating assets Liabilities Net assets $ 20,150,000 8,295,000 11,855,000 7,245,000 $ 4,610,000 3,802,000 808,000 Book Values December 31, 2020 December 31, 2021 $ 1,204,000 9,868,000 (1,204,000) $ 1,729,000 11,239,000 (1,683,000) $ 9,868,000 $ 11,285,000 $ 2,887,000 $ 3,355,000 $ 6,981,000 $ 7,930,000 Market Values December 31, December 31, 2020 2021 $9,171,000 $ 10,137,000 Required: 1. Compute the margin, turnover, and ROI using operating income and the book value of average total operating assets. (Round "Margin" answer as a percentage rounded to 2 decimal places and other answers to 1 decimal place.) Margin Turnover Return on investment Return on investment 2. Compute ROI using segment margin and average market value of operating assets. (Round your intermediate calculations to 2 decimal places. Enter your percentage answer rounded to 2 decimal place (i.e., 0.1234 should be entered as 12.34).) % % Residual income % 3. Compute RI using operating income and the market value of average net assets. Assume that the required rate of return is 7%.

Answer rating: 100% (QA)

Lets tackle these one at a time 1 Compute the margin turnover and ROI using operating income and the book value of average total operating assets To c... View the full answer