$
Sales 10,000,000
Cost of
sales
(6,000,000)
Gross profit 4,000,000
Expenses
(3,000,000)
Net profit 1,000,000
It had been budgeted to produce 200,000 units and these should
have taken 10 hours each. In fact,
120,000 units were produced in 580,000 hours.
The capital employed by the division is $4,000,000 and the
interest rate is 7%.
Calculate:
(a) Efficiency, capacity utilisation and production volume
ratios or percentages
(b) ROCE (Return on Capital Employed)
(c) RI (Residual Income)