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Unformatted text preview: 4. Invested Capital above must be which of the following if we use it to compute EVA? a. Total Assets b. Total Liabilities c. Owners Equity d. Total Assets Shortterm Liabilities e. Owners Equity + Fixed Assets 5. If the Sales Margin for Austin Co. is 5%, compute Capital Turnover. a. 0.15 b. 3.00 c. 6.67 (rounded) d. 9.52 (rounded) e. Cannot be determined from the information provided Answers Here d b a c b TP = Additional Outlay Cost + Opportunity Cost = (VC + Special costs) + (None: No lost CM on external orders because of excess capacity) = (1+1.5+2+.25) + ($0) = $4.75 RI = Income (Inv Capital x Imputed Interest Rate) = $900k ($6M x 14%) = $60,000 SM = 5% = Income / Sales = $900k / Sales so Sales = $18M and CT = Sales / InvCapital = $18M / $6M = 3.00 or ROI = SM x CT ($900k / $6M) = 5% x CT Same answer....
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 Spring '08
 Welsh
 Managerial Accounting, Pricing

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