The Alpha Company had sales of $2,000,000, net operating income of $320,000 and average operating assets...

The Alpha Company had sales of $2,000,000, net operating income of $320,000 and average operating assets of $575,000. What was the return on investment? Round your percentage answer to the nearest whole percent.

Answer:____________

ABC Industries is evaluating the amount of time between when a customer places an order and when the order is shipped. For last year, the following data was reported:

Inspection time 0.3 days

Wait time 7.0 days

Process time 2.6 days

Move time 0.8 days

Queue time 3.4 days

What is the delivery cycle time in days? Enter the value with 1 decimal place.

Answer:__________

Which of the following activities adds value to the product?
1. Queue time
2. Process time
3. Move time
4. Inspection time

When a company has a manufacturing cycle efficiency ratio of 50%, that means that:
1. Wait time is equal to 50% of the throughput time
2. Inspection time is equal to 50% of the throughput time
3. Process time is equal to 50% of the throughput time
4. Queue time is equal to 50% of the throughput time

The net operating income that an investment center earns above the minimum required return on its average operating assets is:
1. Net income
2. Return on investment
3. Residual income
4. Gross margin

ABC Company had sales of $400,000, net operating income was $112,000, and average operating assets were $520,000. What is the company’s return on investment rounded to 2 decimals?
1. 28.00%
2. 21.54%
3. 76.92%
4. 21.92%

A company is deciding if they should add a new product line that would increase sales by $1,200,000, variable expenses are 45% of sales, and fixed costs are $500,000. The new product line would require an investment that would increase average operating assets by $200,000. What is the company’s return on investment for this new product line?
1. 32%
2. 30%
3. 80%
4. 75%

Expert Solution

1	ROI (Return on investment) =net operating income /average operating assets

	Company 's return on investment (ROI) =320000/575000

	Company 's return on investment (ROI) = 56%

2	Calculate the delivery cycle time in days .

	Delivery Cycle Efficiency = wait time + Through
			=	7.0 days + 7.1 days*
			=	14.1	days


	*Through put time = process time + inspection time + move time + queue time
		=	2.6 days + 0.3 days+0.8 days +3.4 days
		=	7.1	days

3	Correct Answer: Option B - Process time.

	Reason : 1. Queue time,move time,inspection time is non value added activities.
	2	Process time is the value added activities to the product.

4	Correct Answer : Option A - wait time is equal to 50 % of the throughput time.

	Reason:

	Manufacturing Cycle Efficiency = wait time + Through*
	*Through put time = process time + inspection time + move time + queue time

	So a company manufacturing cycle efficiency ratio of 50 % that means that wait tme is equal to 50 % of the throughput time.

5	Correct Answer: Option C - Residual Income

	Reason:

	The net Operating income that an investment centre earns above the minimum required return on its average operating assets is Residual income.

6	Correct Answer:Option B - 21.54 %

	ROI (Return on investment) =net operating income /average operating assets

	Company 's return on investment (ROI) =112000/520000

	Company 's return on investment (ROI) = 21.54 %

7	Correct Answer: Option C - 80%

	ROI (Return on investment) =net operating income /average operating assets

	Increase sales	1200000
	Less: variable cost (45 % of sales)	540000
	Gross Margin	660000
	Less: Fixed cost	500000
	Net Operating Income	160000

	Company's return on investment for this new product line =new product line net operating income/new product line average operating assets
	160000/200000
	80	%

ekkarill92 answered 2 years ago

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