Reference no: EM132576612
Rubber Made Inc. is an industry leader that employs a skilled work force and high-end manufacturing equipment to convert raw-widgets into finished-gadgets used in both residential and commercial building construction.
As a direct result of its dedicated work force and focused business strategy, Rubber Made Inc. has enjoyed continuous growth. The company's President approached the controller to provide him with some analytical information.
The following data pertains to Rubber Made Inc's 2017 and 2018 fiscal years.
2017 2018
Purchased raw-widgets (units) 35,000 45,000
Sold finished-gadgets (units) 29,600 39,700
Selling price of finished gadgets (per unit) $23.00 $21.80
Purchase & manufactured price of raw-widgets (per unit) $18.00 $16.80
Fixed Overhead $100,000 $100,000
Total invested Capital $985,000 $985,000
Cost of capital 6.5% 7.5%
Corporate Tax 35% 35%
REQUIRED:
Question a) Based on the information provided, help the controller calculate the comparative Operating Incomes, Net Income, Operating income percentage, and Contribution margin percentage for 2017 and 2018.
Question b) Calculate the Revenue effect of growth.
Question c) Calculate the Cost effect of growth.
Question d) Calculate the Revenue effect of price.
Question e) Calculate the Cost effect of price.
Question f) Calculate the Productivity component.
Question g) Reconcile the operating Income from 2017 to 2018
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