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Managerial Accounting

Hi need assistance with this practice problem

Eban Wares is a division of a major corporation. The following data are for the latest year of operations:

Sales................................................................................
$10,890,000

Net operating income......................................................
$609,840

Average operating assets.................................................
$3,000,000

The company's minimum required rate of return............
16%

Questions:

What is the division's margin?
What is the division's turnover?
What is the division's return on investment (ROI)?
What is the division's residual income?
What are the company's Net Operating Expenses for the year?

Solution Preview

a. Margin = Net operating income ÷ Sales = $609,840 ÷ $10,890,000 = 5.6%

b. Turnover = Sales ÷ Average operating assets = ...

Solution Summary

The solution explains the calculation of margin, turnover, return on investment and residual income

$2.19