Reference no: EM133130867
Question 1 - Meet's Auto Shop Inc. allows its divisions to operate as autonomous units. Their results for the current year were as follows:
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Sport
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Terrain
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City
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Revenues
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$1,700,000
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$800,000
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$6,000,000
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Current assets
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230,000
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40,000
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410,000
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Capital assets
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870,000
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660,000
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1,590,000
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Current liabilities
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100,000
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100,000
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500,000
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Net operating income
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210,000
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37,000
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470,000
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After-tax income
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188,400
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36,400
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484,400
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Weighted average cost of capital
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10%
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10%
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10%
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For each division compute (to two decimal) the:
a. The margin %?
b. Return on investment (to two decimal) %?
c. Economic value added?
d. Residual income?
e. Turnover (to two decimal)?
Question 2 - Stark, Inc., produces and sells a unique robot antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been reported for the first month of the new plant's operation:
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Selling price
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$50
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Beginning inventory
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0
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Units produced
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35,000
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Units sold
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30,000
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Selling price per unit
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$50
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Selling and Admin expenses:
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Variable per unit
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$2
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Fixed (total)
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$360,000
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Manufacturing costs:
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Direct material cost per unit
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$9
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Direct labour cost per unit
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$8
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Variable overhead cost per unit
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$3
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Fixed overhead cost (Total)
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$595,000
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Management is anxious to see how profitable the new antenna will be and has asked that an income statement be prepared for the month. Assume that direct labour is a variable cost.
Required -
a. Assuming that the company uses absorption costing, compute the unit product cost and prepare an income statement.
b. Assuming that the company uses variable costing, compute the unit product cost and prepare an income statement.
c. Explain the reason for any difference in the ending inventories under the two costing methods and the impact of this difference on reported operating income.
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Prepare a statement showing the budgeted overheads
: Prepare a statement showing the budgeted overheads for next year, analysed between the two cost centres. This should be in the form of three columns
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Expansionary fiscal policy
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Current global economic system
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Firm earn maximum economic profits
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Compute unit product cost and prepare an income statement
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Briefly explain the ethical issues that should be considered
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Postmerger herfindahl-hirschman index
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Health insurance and the demand for medical care
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Maxims of monetary policy
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