GNBExam12

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

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

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