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Exercise 10-2 (Algo) Residual Income [LO10-2]
Juniper Design Limited of Manchester, England, is a company specializing in providing design services to residential developers. Last
year the company had net operating income of $420,000 on sales of $1,200,000. The company's average operating assets for the
year were $1,400,000 and its minimum required rate of return was 12%.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F89d0dcbf-20a1-4554-be86-3faf6158241d%2Fed241dae-5073-47a2-87d3-b042a439b46b%2Fnrc4b1o_processed.jpeg&w=3840&q=75)
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- Exercise 10-2 (Algo) Residual Income [LO10-2] Juniper Design Limited of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $490,000 on sales of $2,000,000. The company's average operating assets for the year were $2,200,000 and its minimum required rate of return was 15%. Required: Compute the company's residual income for the year. Residual incomeResidual income Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of $600,000 on sales of $3,000,000. The company’s average operating assets for the year were $2,800,000 and its minimum required rate of return was 18%. Required: Compute the company’s residual income for the year.M10-10 (Algo) Impact of New Investment on ROI, Residual Income [LO 10-4, 10-5] The Western Division of Claremont Company had net operating income of $135,000 and average invested assets of $557,000. Claremont has a required rate of return of 14.50 percent. Western has an opportunity to increase operating income by $40,000 with a $100,000 investment in assets. Compute Western Division's return on investment and residual income currently and if it undertakes the project. Note: Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Residual Income (Loss) answers to the nearest whole dollar. Return on Investment (ROI) Residual Income (Loss) Current % Proposed Project %
- PA10-1 (Algo) Calculating Return on Investment, Residual Income, Determining Effect of Changes Sales, Expenses, Invested Assets, Hurdle Rate on Each [LO 10-4, 10-5] Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income Average invested assets The company's hurdle rate is 6.51 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: Complete this question by entering your answers in the tabs below. a. Operating income increases by 9 percent. b. Operating income decreases by 11 percent. c. The company invests $253,000 in each division, an amount that generates $110,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.51 percent. Req 1 Req 2A Req 2B Req 2C River Division River Division $ 1,212,000 885,000 $…Required information The Foundational 15 (Algo) [LO10-1, LO10-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income. $ 1,200,000 320,000 880,000 640,000 $ 240,000 Average operating assets $ 600,000 At the beginning of this year, the company has a $150,000 investment opportunity with the following cost and revenue characteristics: Sales Contribution margin ratio Fixed expenses $ 240,000 50 % of sales $ 84,000 The company's minimum required rate of return is 15%. Foundational 10-9 (Algo) 9. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Do not round intermediate calculations. Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) ROI %12. Z Division of XYZ Corp. has the following information for 2002: Assets available for $1,800,000 10% Target rate of return Residual income What was Z Division's return on investment for 2002? (M) a 15% b. 10% $270,000 C. 25% d. 20% Barfield
- 5 rded ces The Foundational 15 (Algo) [LO10-1, LO10-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income t Average operating assets At the beginning of this year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics: Sales Contribution margin ratio Fixed expenses Margin $ 1,200,000 420,000 780,000 600,000 $ 180,000 $ 600,000 $ 99,000 The company's minimum required rate of return is 20%. 60.0 $ 220,000 Foundational 10-7 (Algo) 7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) % 60 of sales15 ces ! Required information [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income. Average operating assets At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: $ 200,000 60 $ 90,000 The company's minimum required rate of return is 15%. Sales Margin $ 1,000,000 300,000 700,000 500,000 $ 200,000 $ 625,000 Contribution margin ratio Fixed expenses 4. What is the margin related to this year's investment opportunity? % of salesThe Foundational 15 (Static) [LO10-1, LO10-2] Skip to question [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 % of sales Fixed expenses $ 90,000 The company’s minimum required rate of return is 15%. Foundational 10-14 (Static) 14. If Westerville’s chief executive officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity? multiple choice Yes No
- Q5. Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $330,700 $1,056,000 Variable costs (132,700) (633,600) Contribution margin $198,000 $422,400 Fixed costs (132,000) (246,400) Operating income $66,000 $176,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Beck Inc. Bryant Inc. b. How much would operating income increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Beck Inc. $ % Bryant Inc. $ % c. The difference in the _________ of operating income is due to the difference in the operating leverages. Beck Inc.'s __________ operating leverage means that its fixed costs are a __________ percentage of contribution margin than are Bryant Inc.'s.[The following information applies to the questions displayed below.] The following information is provided for each Investment Center. Average Assets $ 26,900,000 16,700,000 19,000, 000 Investment Center Income $ 5,350,000 2,338,000 900,000 Cameras Phones Computers QS 9-13 (Algo) Computing residual income LO A1 Assume a target income of 14% of average assets. Compute residual income for each center. (Enter losses with a minus sign.) Target Income Cameras Phones Computers Targeted return Target income % % Residual Income Cameras Phones Computers Residual income (loss)The Foundational 15 (Algo) [LO10-1, LO10-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses $ 2,200,000 660,000 1,540,000 1,100,000 Net operating income Average operating assets $ 440,000 $ 1,375,000 At the beginning of this year, the company has a $275,000 investment opportunity with the following cost and revenue characteristics: Sales $ 440,000 Contribution margin ratio Fixed expenses 60 % of sales $ 220,000 The company's minimum required rate of return is 15%. oundational 10-4 (Algo) What is the margin related to this year's investment opportunity? Margin 15%