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examchap10 - Folk Exam Questions - Chapter 10 1 The...

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Folk Exam Questions - Chapter 10 1 The following data are available for the Northern Division of Comet Products and the single product it makes: Unit selling price $60 Variable cost per unit $36 Annual fixed costs $840,000 Average operating assets $4,500,00 0 How many units must the Northern Division sell each year to have an ROI of 16%? Solution: First, calculate, the company’s required operating income as follows: Operating income ÷ Average operating assets = ROI Operating income = Average operating assets x ROI Operating income = $4,500,000 x .16 = $720,000 Then, calculate the number of units (X) that must be sold to generate that operating income as follows: Sales – Variable expenses – Fixed expenses = Operating income $60X – $36X – $840,000 = $720,000 $24X = $1,560,000 X = 65,000 2 The Southern Division of Schuler Enterprises recorded operating data as follows for the past year: Sales $600,00 0 Net operating income 75,000 Average operating assets 300,000 Stockholders’ equity
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examchap10 - Folk Exam Questions - Chapter 10 1 The...

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