Question

Joyner Pickled Pepper Company produces pickled jalapeno pepper relish. Selected results from the most current year were as follows:

Sales revenue		$3,485,300
Operating income		453,089
Average total assets		3,830,000

Production manager Veronica Brockman is investigating the purchase of a new brining station that will increase the plant’s production capacity. Based on her research, Veronica thinks the station would cost $162,000 and would increase sales revenue by $200,000 and operating profit by $26,000.

Calculate Joyner’s current margin, asset turnover, and return on investment. (Round answers to 2 decimal places, e.g. 52.75.)

Current Margin		Enter percentagesEnter percentagesEnter percentages %
Asset Turnover		Enter Asset Turnover in timesEnter Asset Turnover in timesEnter Asset Turnover in times times
Return on Investment		Enter percentagesEnter percentagesEnter percentages %

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Calculate Joyner’s margin, asset turnover, and return on investment assuming the company purchases the new brining station. (Round answers to 2 decimal places, e.g. 52.75.)

Current Margin		Enter percentagesEnter percentagesEnter percentages %
Asset Turnover		Enter Asset Turnover in timesEnter Asset Turnover in timesEnter Asset Turnover in times times
Return on Investment		Enter percentagesEnter percentagesEnter percentages %

eTextbook and Media

  

  

Assume Veronica Brockman’s annual bonus is based on the company’s return on investment. Will Veronica support the purchase of the new brining station?

Select an optionSelect an optionSelect an option                                                                      NoYes

Answer 1

Calculate Joyner’s current margin, asset turnover, and return on investment. (Round answers to 2 decimal places, e.g. 52.75.)

Current Margin		453089/3485300 = 13%
Asset Turnover		3485300/3830000 = 0.91
Return on Investment		453089/3830000 = 11.83%

Calculate Joyner’s margin, asset turnover, and return on investment assuming the company purchases the new brining station. (Round answers to 2 decimal places, e.g. 52.75.)

Current Margin		479089/3685300 = 13%
Asset Turnover		3685300/3992000 = 0.92
Return on Investment		479089/3992000 = 12%

Assume Veronica Brockman’s annual bonus is based on the company’s return on investment. Will Veronica support the purchase of the new brining station?

Yes