Question

In: Accounting

Operating results for Triton Entertainment Limited for the year ended May 31, 2020 are as follows:...

Operating results for Triton Entertainment Limited for the year ended May 31, 2020 are as follows:

Sales $4,180,000
Operating income 623,700
Average operating assets 1,980,000
Minimum required rate of return 20%


Required: Consider the following questions independently. Carry out all calculations to two decimal places.

A. Compute Triton’s ROI and residual income.
B. Assume that the manager of Triton can increase sales by $350,000 and as a result operating income will increase by $60,000 without any increase in operating assets. What would the company’s ROI be now?
C. The owner of the company feels that an investment in operating assets of $500,000 will increase sales by $700,000 and operating income by $120,300. If you were the manager of Triton and are evaluated based on the company’s ROI would you want to make the change. Why or why not?
D. Using the information in part C would your answer change if you were evaluated on residual income. Why or why not?

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Operating results for Triton Entertainment Limited for the year ended May 31, 2020 are as follows:...
Operating results for Triton Entertainment Limited for the year ended May 31, 2020 are as follows: Sales $4,180,000 Operating income 623,700 Average operating assets 1,980,000 Minimum required rate of return 20% Required: Consider the following questions independently. Carry out all calculations to two decimal places. A. Compute Triton’s ROI and residual income. B. Assume that the manager of Triton can increase sales by $350,000 and as a result operating income will increase by $60,000 without any increase in operating assets....
The following transactions occurred for White Rock Ltd during year ended May 31, 2020. As of...
The following transactions occurred for White Rock Ltd during year ended May 31, 2020. As of the start of the year, June 1, 2019, White Rock had $3,500 of automotive supplies on hand. During the year, it purchased $9,100 in automotive supplies. At year end, $1,300 of automotive supplies were on hand. On October 31, 2019, White Rock purchased $88,000 of automotive repair equipment on account. The equipment has an 8-year useful life. White Rock signed an agreement to rent...
The following information was available for Wild Oat Company for the month ended May 31, 2020. (a) The book balance at May 31, 2020 was $6,890.22. (b) The bank balance at May 31, 2020 was $8,660.22.
The following information was available for Wild Oat Company for the month ended May 31, 2020.(a) The book balance at May 31, 2020 was $6,890.22.(b) The bank balance at May 31, 2020 was $8,660.22.(c) Outstanding cheques amounted to $6,310.(d) The may 31st cash receipts of $5,600 were deposited but have not yet appeared on the bank statement.(e) A $50 debit memorandum for cheques printed by the bank was included with the cancelled cheques.(f) A customer's note for $1,000 was collected...
The capital structure of Minelli Enterprises Limited as at 31 March 2020 is as follows: $’000...
The capital structure of Minelli Enterprises Limited as at 31 March 2020 is as follows: $’000 Ordinary shares (par value $1.50) 60,000 5.5% (post-tax) Preference Shares (par value $2.20) 8,800 6.5% (pre-tax) Bonds semi-annual (par value $1000) 80,000 Term Loan (interest rate 4.25% per annum) 6,500 Additional Information: • The ordinary shares are currently trading at $1.95 while the preference shares are trading at $2.45. • Return on government bonds is 1.25%, the market risk premium 4.25%. A consultant has...
The capital structure of Minelli Enterprises Limited as at 31 March 2020 is as follows: -Ordinary...
The capital structure of Minelli Enterprises Limited as at 31 March 2020 is as follows: -Ordinary shares (par value $1.50) 60,000 5.5% (post-tax) Preference Shares (par value $2.20) 8,800 6.5% (pre-tax) Bonds semi-annual (par value $1000) 80,000 Term Loan (interest rate 4.25% per annum) 6,500 Additional Information: • The ordinary shares are currently trading at $1.95 while the preference shares are trading at $2.45. • Return on government bonds is 1.25%, the market risk premium 4.25%. A consultant has estimated...
The statement of financial position of Larkspur Limited follows for the current year, 2020: LARKSPUR LIMITED...
The statement of financial position of Larkspur Limited follows for the current year, 2020: LARKSPUR LIMITED Statement of Financial Position December 31, 2020 Current assets $167,580 Current liabilities $122,220 Investments 108,360 Long-term liabilities 214,200 Property, plant, and equipment 267,120 Shareholders’ equity 294,840 Intangible assets 40,320 Other assets 47,880 $631,260 $631,260 The following additional information is available: 1. Current Assets include the following: bank account with an overdraft balance of $18,900; inventory with a FIFO cost of $109,620 and a net...
The following information was available for Anderson Company for the month ended May 31, 2020
The following information was available for Anderson Company for the month ended May 31, 2020
The information that follows relates to equipment owned by Pearl Limited at December 31, 2020: Cost...
The information that follows relates to equipment owned by Pearl Limited at December 31, 2020: Cost $8,280,000 Accumulated depreciation to date 920,000 Expected future net cash flows (undiscounted) 6,440,000 Expected future net cash flows (discounted, value in use) 5,842,000 Fair value 5,704,000 Costs to sell (costs of disposal) 46,000 At December 31, 2020, Pearl discontinues use of the equipment and intends to dispose of it in the coming year by selling it to a competitor. It is expected that the...
The information that follows is for Becky’s Baskets for the year ended December 31, 2017 and...
The information that follows is for Becky’s Baskets for the year ended December 31, 2017 and covers questions 20-27. Sales                                                                            2,000 baskets at $50 per basket = $100,000                   Costs: (2,000 baskets produced and sold)             Variable Costs                                                                                                Total Cost                         Direct materials                                                                                  16,000                         Direct labor                                                                                        14,000 Manufacturing overhead                                                                  16,000                         Selling and Administrative Costs                                                       10,000             Fixed Costs                         Manufacturing overhead                                                                    30,000                         Selling and...
The Statements of Financial Position of Dream Limited for the year ended 31 December 2015 are...
The Statements of Financial Position of Dream Limited for the year ended 31 December 2015 are provided below: Dream Limited Statement of Financial Position as at 31 December: 2015 2014 $’000 $’000 Assets: Land 350 200 PPE 950 510 Accumulated depreciation (380) (240) 570 270 Cash at bank 20 - Inventories 110 200 Accounts receivable 200 180 Total 1,250 850 Liabilities: Accounts payable 160 210 Bank overdraft 0 20 Salary payable 40 20 Tax payable 80 60 Dividends Payable 50...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT