PA3. LO 12.3Macon Mills is a division of Bolin Products, Inc. During the most recent year,...

PA3.

LO 12.3Macon Mills is a division of Bolin Products, Inc. During the most recent year, Macon had a net income of $40 million. Included in the income was interest expense of $2,800,000. The company’s tax rate was 40%. Total assets were $470 million, current liabilities were $104,000,000, and $72,000,000 of the current liabilities are noninterest bearing. What are the invested capital and ROI for Macon?

Expert Solution

INVESTED CAPITAL

Invested Capital = Total Assets - Non Interest Bearing current Liabilities

Total Assets = $470,000,000

Non interest bearing current liabilities = $72,000,000

Invested Capital = $470,000,000 - $72,000,000 = $398,000,000

RETURN ON INCOME

ROI = Net operating income after tax / Invested Capital * 100

Net operating income after tax = $40,000,000 + $2,800,000 (1 - 40%)

= $40,000,000 + $1,680,000

= $41,680,000

Invested Capital = $398,000,000

ROI = $41,680,000 / $398,000,000 * 100 = 10.47%

All the best...

ekkarill92 answered 2 years ago

Knitpix Products is a division of Parker Textiles Inc. During the coming year, it expects to...

Knitpix Products is a division of Parker Textiles Inc. During the coming year, it expects to earn income Of $310,000 based on sales of $3.45 million; without any new investments, the division will have average operating assets of $3 million. The division is considering a capital investment project—adding knitting machines to produce gaiters— that requires an additional investment of $600,000 and increases net income by $57,500 (sales would increase by $575,000). If made, the investment would increase beginning operating assets...

ZZ, Inc. sells three products. Income statements for the three products for the most recent year...

ZZ, Inc. sells three products. Income statements for the three products for the most recent year appear below: Product A Product B Product C Sales revenue ............. $120,000 $180,000 $145,000 Costs: Variable costs ........ 84,000 54,000 87,000 Advertising ........... 12,000 7,000 8,000 Rent .................. 11,000 11,000 11,000 Supervisor's salary ... 30,000 30,000 25,000 Property taxes ........ 10,000 8,000 2,000 Net income/loss ............ <27,000> 70,000 12,000 The rent is allocated to the three products equally and the property taxes are allocated...

Hargenrader, Inc. produces and sells two products. During the most recent month, Product P02S sales were...

Hargenrader, Inc. produces and sells two products. During the most recent month, Product P02S sales were $24,000 and its variable expenses were $7,920. Product O50U’s sales were $41,000 and its variable expenses were $14,180. The company’s fixed expenses were $40,350. A. Determine the overall break-even point for the company in total sales dollars. Show your work. Check figure: $61,136 Contribution Margin = Sales Revenue – total variable costs = 65,000(24,000+41,000) – 22,100 (7,920+14,180) = 42,900 Overall...

Lareem company produces two products. Information on the two products for the most recent year appears...

Lareem company produces two products. Information on the two products for the most recent year appears below: Product A Product B selling price per bar $5.00 $3.00 variable costs per bar $2.25 $1.70 number of units sold 50,000 units 42,000 units Fixed costs totaled $108,000. ABC Company is considering investing in an advertising campaign that will double the sales volume of Product B. ABC wants to increase next year's profits by 30% over the most recent year's profits. Assume the...

ABC Company sells three products. Income statements for the three products for the most recent year...

ABC Company sells three products. Income statements for the three products for the most recent year appear below: Product A Product B Product C Sales revenue ................ $120,000 $180,000 $145,000 Costs: Variable costs ........... 78,000 54,000 87,000 Advertising .............. 12,000 7,000 8,000 Rent ..................... 10,000 10,000 10,000 Supervisor's salary ...... 25,000 35,000 30,000 Property taxes ........... 10,000 6,000 2,000 Net income/loss ............... <15,000> 68,000 8,000 The rent is allocated to the three products equally and the property taxes are allocated...

Brancati Inc. produces and sells two products. Data concerning those products for the most recent month...

Brancati Inc. produces and sells two products. Data concerning those products for the most recent month appear below: Product W07C Product B29Z Sales………………………… $25,000 $27,000 Variable expenses………... $7,000 $8,600 Fixed expenses for the entire company for the month were $32,860. Answer the following questions: 1. Determine the overall break-even point for the company. Show your work! 2. If the sales mix shifts toward Product W07C with no change in total sales, what will happen to the break-even point for the...

Major Mills is a large manufacturer of breakfast cereal. One of its most popular products is...

Major Mills is a large manufacturer of breakfast cereal. One of its most popular products is Sugar-Bombs, which sells at wholesale for $55/case. The cost to produce is $42.20 per case, as follows: Ingredients, $8.70; Packaging, $4.10; Direct Labor, $3.40; Overhead, $26 (20% variable). A large grocery retailer has approached Major Mills with a proposal to create a house-brand version of Sugar-Bombs. The retailer offers to purchase 10,000 cases per month of the house brand for one year, after which...

Data on Trenton Travel Inc. for the most recent year are shown below, along with the...

Data on Trenton Travel Inc. for the most recent year are shown below, along with the days sales outstanding of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO to the benchmarks' average. If this were done, by how much would receivables decline? Use a 365-day year. Sales $110,000 Days sales outstanding (DSO) 49.78 Benchmark days sales outstanding (DSO) 20

Payne Products had $3.2 million in sales revenues in the most recent year and expects sales...

Payne Products had $3.2 million in sales revenues in the most recent year and expects sales growth to be 25% this year. Payne would like to determine the effect of various current assets policies on its financial performance. Payne has $3 million of fixed assets and intends to keep its debt ratio at its historical level of 40%. Payne's debt interest rate is currently 10%. You are to evaluate three different current asset policies: (1) a tight policy in which...

During the most recent year, Boston Corp. had the following data: Beginning inventory in units - ...

During the most recent year, Boston Corp. had the following data: Beginning inventory in units - Units produced 15,000 Units sold ($125 per unit) 12,000 Variable costs per unit: Direct materials $15 Direct labor $20 Variable overhead $10 Fixed costs: Fixed overhead per unit produced $20 Fixed selling and administrative $ 200,000 Required: A. How many units are in ending inventory? B. Using absorption costing, calculate the per-unit product cost....

Question