User Account

All Pages

Compute the roi for the division with the new investment

Assignment Help Managerial Accounting
Reference no: EM131700029

Knitpix Products is a division of Parker Textiles Inc. During the coming year, it expects to earn income Of $310,000 based on sales of $3.45 million; without any new investments, the division will have average operating assets of $3 million. The division is considering a capital investment project-adding knitting machines to produce gaiters- that requires an additional investment of $600,000 and increases net income by $57,500 (sales would increase by $575,000). If made, the investment would increase beginning operating assets by $600,000 and ending operating assets by $400,000.

Assume that the actual cost of capital for the company is 7 percent.

Required:

Compute the ROl for the division without the investment.

Compute the margin and turnover ratios without the investment. Show that the product of the margin and turnover ratios equals the ROI computed in Requirement 1.

Compute the ROI for the division with the new investment. Do you think the divisional manager will approve the investment?

Compute the margin and turnover ratios for the division with the new investment. Compare these with the old ratios.

Compute the EVA of the division with and without the investment. Should the manager decide to make the knitting machine investment?

Reference no: EM131700029

Questions Cloud

Write the complete lp model : Max number of ounces of products 1 2 and 3 that can be sold are 5000, 5000, and 3000. A max of 25,000 hours of labor are available.
Pertaining to operations management or supply chain : Select a relevant topic pertaining to Operations Management or Supply Chain such as lean supply chain or quality managenemnt. Find at least two related articles
Different disciplines within a typical supply chain : What are the different disciplines within a typical supply chain? Compare the various supply chain segments within your own sphere of influence or a company.
Discuss how to develop potential solutions : This allows the student to use critical thinking in their research to identify problems and discuss how to develop potential solutions.
Compute the roi for the division with the new investment : Compute the ROI for the division with the new investment. Do you think the divisional manager will approve the investment?
Determining the effectiveness of a scheduling decision : List the four criteria for determining the effectiveness of a scheduling decision. How do these criteria relate to the four criteria for sequencing decisions?
Dmaic six sigma quality improvement : The purpose of this assignment is for students to receive Six Sigma Yellow Belt Training Executing DMAIC Six Sigma quality improvement
Determine whether the company should purchase the machine : Using the net present value method to evaluate the capital investment, determine whether the company should purchase the machine.
Hpt professional in the analysis phase of a project : What do you think the biggest challenges are to an HPT professional in the analysis phase of a project? Why?

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd