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Practice Quiz 10 - would be what Income Invested...

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Practice Quiz 10 Sales Price to outside customers: $100 Variable manufacturing cost/part: $20 Fixed manufacturing cost/part: $10 Variable selling cost/part: $5 Fixed selling cost/part: $5 1. What would the minimum transfer price be if they were at full capacity? Market price-v.selling costs Answer: $95.00 2. If they are not at full capacity, what is the minimum transfer price? Answer is just variable manufacturing cost per part! Answer: $20.00 Company G: Net income: $8,000 Total assets: $100,000 Current assets: $20,000 Interest Expense: $5,000 Current liabilities: $20,000 Stockholder’s equity: $60,000 3. If they can reduce total assets by 20% by reducing total long term liabilities, the ROI
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Unformatted text preview: would be what? Income Invested Capital (Total assets-current liabilities) Answer: 21.67% 4. What is your current residual income if cost of capital is 2% and they can’t reduce their total assets? NOPAT=income – (invested capital *cost of capital %) Answer: 11,400 Pretax income: $500,000 Cash Tax: $100,000 Adjusted Total Assets: $1,000,000 Adjusted Current Liablities: $200,000 10% cost of capital 5. What is the EVA? RI= (pretax- cash tax)- [(Total assets-Current Liabilities)*%cost of capital] Answer: $320,000...
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  • Spring '06
  • Sumbiznatch
  • Generally Accepted Accounting Principles, $5, total assets, $5 1, minimum transfer price, total assets-current liabilities

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