Reference no: EM131832542
Questions -
1. Basic Segmented Income Statement
Royal Lawncare Company produces and sells two packaged products, Weedban and Greengrow. Revenue and cost information relating to the products follow:
|
|
Product
|
|
|
Weedban
|
Greengrow
|
|
Selling price per unit
|
$ 6.00
|
$ 7.50
|
|
Variable expenses per unit
|
$ 2.40
|
$ 5.25
|
|
Traceable fixed expenses per year
|
$45,000
|
$21,000
|
Common fixed expenses in the company total $33,000 annually. Last year the company produced and sold 15,000 units of Weedban and 28,000 units of Greengrow.
Required: Prepare a contribution format income statement segmented by product lines.
2. Compute the Return on Investment
Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below:
|
Sales
|
$7,500,000
|
|
Net operating income
|
$600,000
|
|
Average operating assets
|
$5,000,000
|
Requirement 1: Compute the margin for Alyeska Services Company.
Requirement 2: Compute the turnover for Alyeska Services Company.
Requirement 3: Compute the return on investment (ROI) for Alyeska Services Company.
3. Residual 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%. (The currency used in England is the pound, denoted by £.)
Required: Compute the company's residual income for the year.