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Calculate the economic value for east mullett manufacturing

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Calculating Economic Value Added

East Mullett Manufacturing earned operating income last year as shown in the following income statement:

Sales$3,750,000Cost of goods sold2,250,000Gross margin$1,500,000Selling and administrative expense1,200,000Operating income$ 300,000Less: Income taxes (@ 40%)120,000   Net income$ 180,000At the beginning of the year, the value of operating assets was $1,600,000. At the end of the year, the value of operating assets was $1,400,000.

Total capital employed equaled $1,200,000. East Mullett's actual cost of capital is 4%.

Required: Calculate the EVA for East Mullett Manufacturing.

Reference no: EM131578900

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