Managerial Accounting
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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?
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Solution Summary
The solution explains the calculation of margin, turnover, return on investment and residual income
Solution Preview
a. Margin = Net operating income ÷ Sales = $609,840 ÷ $10,890,000 = 5.6%
b. Turnover = Sales ÷ Average operating assets = ...
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