Return on Investment, Margin, Turnover

Ready Electronics is facing stiff competition from imported goods. Its operating income margin has been declining steadily for the past several years. The company has been forced to lower prices so that it can maintain its market share. The operating results for the past 3 years are as follows:

For the coming year, Ready's president plans to install a JIT purchasing and manufacturing system. She estimates that inventories will be reduced by 70% during the first year of operations, producing a 20% reduction in the average operating assets of the company, which would remain unchanged without the JIT system. She also estimates that sales and operating income will be restored to Year 1 levels because of simultaneous reductions in operating expenses and selling prices. Lower selling prices will allow Ready to expand its market share.

(Note: Round all numbers to two decimal places.)

Required:

1. Compute the ROI, margin, and turnover for Years 1, 2, and 3.

2. Conceptual Connection: Suppose that in Year 4 the sales and operating income were achieved as expected, but inventories remained at the same level as in Year 3. Compute the expected ROI, margin, and turnover.

Why did the ROI increase over the Year 3 level?
The ROI increased because expenses decreased and assets turned over at a higher rate (sales increased).

3. Conceptual Connection: Suppose that the sales and net operating income for Year 4 remained the same as in Year 3 but inventory reductions were achieved as projected. Compute the ROI, margin, and turnover.

Why did the ROI exceed the Year 3 level?
The ROI increased because assets decreased.

4. Conceptual Connection: Assume that all expectations for Year 4 were realized. Compute the expected ROI, margin, and turnover.

Why did the ROI increase over the Year 3 level?
The ROI increased because expenses decreased and assets turned over at a higher rate.

One of your Taiwanese suppliers has bid on a new line of molded plastic parts that is currently being assembled at your plant. The supplier has bid $0.10 per part, given a forecast you provided of 200,000 parts in year 1; 400,000 in year 2; and 500,000 in year 3. Shipping and handling of parts from the supplier’s factory is estimated at $0.03 per unit. Additional inventory handling charges should amount to $0.005 per unit. Finally, administrative costs are estimated at $30 per month.

Although your plant is able to continue producing the part, the plant would need to invest in another molding machine, which would cost $20,000. Direct materials can be purchased for $0.06 per unit. Direct labor is estimated at $0.05 per unit for wages plus a 50 percent surcharge for benefits and, indirect labor is estimated at $0.009 per unit plus 50 percent benefits. Up-front engineering and design costs will amount to $30,000. Finally, management has insisted that overhead be allocated if the parts are made in-house at a rate of 100 percent of direct labor wage costs. The firm uses a cost of capital of 15 percent per year.

a. Calculate the difference in NPVs between the Make and Buy options. Express all costs as positive values in your calculations. It is suggested to use the NPV function in Excel. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

(Difference in NPV $

b. Should you continue to produce in-house or accept the bid from your Taiwanese supplier?

Nicole’s Getaway Spa (NGS) purchased a hydrotherapy tub system to add to the wellness programs at NGS. The machine was purchased at the beginning of the year at a cost of $9,500. The estimated useful life was five years and the residual value was $500. Assume that the estimated productive life of the machine is 10,000 hours. Expected annual production was year 1, 2,200 hours; year 2, 2,300 hours; year 3, 2,400 hours; year 4, 2,100 hours; and year 5, 1,000 hours.

Assume NGS sold the hydrotherapy tub system for $2,850 at the end of year 3.The following amounts were forecast for year 3: Sales Revenues $43,000; Cost of Goods Sold $34,000; Other Operating Expenses $4,300; and Interest Expense $900. Create an income statement for year 3 for each of the different depreciation methods, ending at Income before Income Tax Expense. (Don't forget to include a loss or gain on disposal for each method.).

Estate Finance Family Tax Plan Question

1. On January 2, 2000, Larry creates a trust with himself as trustee. Larry as trustee may distribute income and principal to Susie and Leon to provide for their health, education, maintenance and support. Upon Larry's death, the remainder is distributed to Susie and Leon equally. Does Larry's power to distribute principal and income cause the trust to be grantor as to Larry under § 671? Why or why not?

What is the Interpretation between the two companies' ratios for The 2015 & 2016 Celgene & 2015 & 2016 Gilead Financial statements used to calculate these ratios.

Estate Finance Family Tax Plan Question

Assume for the purposes of this question that the UPAIA dictates the calculation of fiduciary accounting income.

1. In 2001, Larry creates a trust with Tenleytown Trust Company as trustee. The trustee must distribute income to Susie, Jeff and Leon (the trust does not provide for distributions of principal). In 2002, the trust has $50,000 of interest from corporate bonds, $50,000 of interest from tax-exempt municipal bonds and $50,000 of dividends. The trust also sells Asset A that has a basis of $100,000 for $500,000. In 2012, trust pays trustee fees to Tenleytown Trust Company of $50,000 and attorney's fees of $50,000 to the law offices of Hiram Katz. What is the trust's fiduciary accounting income? Analyze how much of each receipt and disbursement should be allocated to income or principal.

Financial accounting information is historical in nature, reporting on what has happened in the past. To facilitate comparisons between companies, this information must conform to certain accounting standards or principles called generally accepted accounting principles (GAAP).

Please discuss this statement, emphasising the importance of a user of financial statements being able to compare financial statements prepared by different companies.

Write a paragraph discussing the differences between common stock and preferred stock from the investor's perspective for this company. Comment specifically on dividends, potential for the future increase in share price and risks.

Thanks,

Equivalent Units of Production and Related Costs

The charges to Work in Process—Assembly Department for a period, together with information concerning production, are as follows. All direct materials are placed in process at the beginning of production.

Determine the following:

a. The number of units in work in process inventory at the end of the period.
units

b. Equivalent units of production for direct materials and conversion. If an amount is zero or a blank, enter in "0".

c. Costs per equivalent unit for direct materials and conversion. If required, round your answers to the nearest cent.

d. Cost of the units started and completed during the period.
$

Fred Meyer wishes to exchange a unique piece of machinery used in its operations. Fred Meyer has received three offers from other companies in the industry, each of which lacks commercial substance:

Oryx Energy offered to exchange a Franklin desalination water system, and pay $20,900.
Sara Lee offered to exchange a Komatsu 120-ton truck, and pay $62,600.
Dyna-Flex offered to exchange a Massey-Ferguson front-loader, and pay $19,800.

Information concerning each of the assets to be exchanged is noted below:

Based on the three offers above and assuming Fred Meyer uses the straight-line method of depreciation with a salvage value of $1,100 an estimated useful life of 11 years, what is the annual depreciation expense of the exchanged asset that produces the least amount of depreciation expense for Fred Meyer in future years?

During 2014, Eagle Beach Company EBC) had sales of $1,000,000, cost of goods sold of $425,000, administrative and selling expenses of $95,000, depreciation expense of $140,000 and interest expense of $70,000. The tax rate is 35 percent. Ignore any tax loss carryback or carry forward provisions. What is the operating cash flow for EBC?

A. $340,000

B.$385,500

C.$361,000

12.

a.

Williams Sonoma took the following markdowns:

• 24 crepe pans, originally priced at $29.00 each, new price of $13.00 each
• 21 ceramic baking pans, originally priced at $50.00 each, new price of $21.00 each
• 29 cookbook holders, originally priced at $18.00 each, new price of $8.00 each
• 27 copies of their signature grilling cookbook, originally priced at $21.00 each, new price of $10.00 each

Find the total markdown taken on this merchandise.

b.

At a furniture store's clearance center, 33 recliner chairs were sold. All 33 recliners were originally marked at $699.00 and sold at the clearance price of $289.00. Find the total markdown dollars taken.

c.

A buyer of women's jewelry purchased a line of earrings to retail at $51.50 each. The manufacturer has offered these earrings to the retailer at a cost of $9.00 each. Determine the markup percentage.

Economy Appliance Co. manufactures low-price, no-frills appliances that are in great demand for rental units. Pricing and cost information on Economy's main products are as follows.

Customers can contract to purchase either individually at the stated prices or a three-item bundle with a price of $1,800. The bundle price includes delivery and installation. Economy provides delivery and installation as a standalone service for any of its products for a price of $100.

Instructions Respond to the requirements related to the following independent revenue arrangements for Economy Appliance Co.

Please show work been stuck on this one for two days!

Which of the following can be done as part of the bank reconciliation process?
Select all that apply.

Select one or more:

A. You can open and edit transactions listed on the reconciliation screen.

B. Service charges and interest income not previously recorded can be entered.

C. Transactions dated subsequent to the bank statement ending date can be hidden from view.

D. New banking transactions (checks and deposits for example) can be entered.