MAQuiz9 - ACG 2071 Quiz November 6 2007 Name UFID Gator...

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Name____________________________________ November 6, 2007 UFID#______________________________ Gator Company has several divisions. Division A produces and sells part #2007 to outside customers and to other divisions of the company. Data for part #2007 are: Sales price of part to outside customers $70 Variable manufacturing costs per part 30 Fixed manufacturing costs per part 20 Variable selling costs per part 10 Fixed selling costs per part 5 There are no variable selling costs when Division A sells to other divisions of Gator Company. 1. Assume Division A is working at full capacity. Calculate the minimum transfer price Division A would accept from other divisions of Gator Company for part #2007 . 2. Assume Division A is not working at full capacity. Calculate the minimum transfer price Division A would accept from other divisions of Gator Company for part #2007 . Gator , Inc. reported the following data (in thousands) for last year: Before-tax operating income $ 840 Total assets 10,000 Current liabilities 2,000 Stockholders’ equity 5,000 Gator, Inc. defines income as “before-tax operating income” to calculate ROI and invested capital as “total assets minus current liabilities” to calculate ROI and EP 3. Assume that Gator, Inc. can reduce total assets and total long-term liabilities by 10%. Calculate the return on invested capital (ROI). 4. Assume that Gator, Inc. cannot reduce its total assets (or total long-term liabilities). Calculate the economic profit (EP) assuming a 30% income tax rate and a 7% cost of capital. Gator Industries has adjusted before-tax operating income of $20 million. Cash taxes are $2 million, adjusted total assets are $200 million, current liabilities are $40 million, and stockholders’ equity is $100 million. Gator Industries has a 10% cost of capital. 5. Calculate the Economic Value Added (EVA).
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This test prep was uploaded on 04/18/2008 for the course ACG 2071 taught by Professor Sumbiznatch during the Spring '06 term at University of Florida.

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MAQuiz9 - ACG 2071 Quiz November 6 2007 Name UFID Gator...

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