GNBExam12

GNBExam12 - GNB 12e Practice Exam Chapter 12 1 The...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
GNB 12e Practice Exam – Chapter 12 1. The following data are available for the Southwestern Division of Evans, Inc. and the single product it makes. Annual fixed costs $560,000 Average operating assets $3,000,000 Unit selling price $40 Variable cost per unit $24 How many units must the division sell each year to have an ROI of 16%? First, calculate, the division’s required operating income as follows: Net operating income = Average operating assets x ROI = $3,000,000 x .16 = $480,000 Then, calculate the number of units that must be sold to generate that operating income as follows: Net operating income = Sales – Variable expenses – Fixed expenses Let X represent the number of units $480,000 = $40X – $24X – $560,000; $1,040,000 = $16X; X = 65,000 2. The Northeastern Division of Brillstein Inc. recorded operating data as follows for the past year. Average operating assets 200,000 Net operating income 50,000 Residual income 26,000 Sales $400,000 Stockholders’ equity 160,000 Part (a) What was the division’s return on investment? The return on investment for the past year is determined as follows:
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 2

GNBExam12 - GNB 12e Practice Exam Chapter 12 1 The...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online