Kris Company makes batik tenun and has only two products, the Batik Lurik and the Batik...

 

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Kris Company makes batik tenun and has only two products, the Batik Lurik and the Batik Ulos. To produce Batik Lurik, Kris employed assets of $3,500,000 at the beginning of the period and $2,400,000 of assets at the end of the period. Other costs to manufacture the Batik Lurik include the following: Direct materials $25 per unit Direct Labor Production $16 per direct labor-hour $3 per machine-hour General administration and selling costs total $15,000 for the period. In the current period, Kris produced 3,700 Batik Lurik using 2,000 DL-hours and 200,000 machine hours. Kris sold these batik tenun for $280 each. a. Assuming that IC defines investment as average assets during the period, what is the return on investment for the Batik Lurik division? (round 3 numbers behind the comma). b. Calculate the residual income for Batik Lurik if Kris has a required rate of return of 6% on investments. Kris Company makes batik tenun and has only two products, the Batik Lurik and the Batik Ulos. To produce Batik Lurik, Kris employed assets of $3,500,000 at the beginning of the period and $2,400,000 of assets at the end of the period. Other costs to manufacture the Batik Lurik include the following: Direct materials $25 per unit Direct Labor Production $16 per direct labor-hour $3 per machine-hour General administration and selling costs total $15,000 for the period. In the current period, Kris produced 3,700 Batik Lurik using 2,000 DL-hours and 200,000 machine hours. Kris sold these batik tenun for $280 each. a. Assuming that IC defines investment as average assets during the period, what is the return on investment for the Batik Lurik division? (round 3 numbers behind the comma). b. Calculate the residual income for Batik Lurik if Kris has a required rate of return of 6% on investments.

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