Fixed Asset Turnover: Returns, Allowances, and Assets
Not what you're looking for?
During 2011, Company X sells 500,000 units for $8 each. Sales discounts are $100,000 and sales returns and allowances are $300,000. The company reported a total of $710,000 in fixed assets on January 1, 2011 and $890,000 in fixed assets on December 31, 2011.
a. Calculate net sales revenue.
b. Calculate average fixed assets.
c. Calculate the fixed asset turnover ratio.
d. Assume the 2011 fixed asset turnover ratio was lower than the 2010 ratio. Describe one circumstance where this change would indicate bad news and one circumstance where this change would be consistent with good news.
Purchase this Solution
Solution Summary
This solution calculates net sales revenue, average fixed assets, the fixed asset turnover ratio, and circumstances where changes in assets would indicate positive or negative news. All calculations and answers are fully explained.
Solution Preview
a) To calculate net sales revenue, we calculate as follows:
500,000 units x $8 = 4,000,000
Returns & allowances - 300,000
Discounts - 100,000
Total net sales revenue = 3,600,000
b) To calculate average fixed assets, we calculate as follows:
Current year fixed assets 890,000 + previous yr. fixed ...
Purchase this Solution
Free BrainMass Quizzes
Operations Management
This quiz tests a student's knowledge about Operations Management
Introduction to Finance
This quiz test introductory finance topics.
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.