Explore BrainMass

Explore BrainMass

    Divison Margin, Turnover, ROI and RI

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    See attached file for full problems details.

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

    Required:
    a. What is the division's margin?
    b. What is the division's turnover?
    c. What is the division's return on investment (ROI)?
    d. What is the division's residual income?

    Adam Co. manufactures and sells medals for winners of athletic and other events. Its manufacturing plant has the capacity to produce 15,000 medals each month; current monthly production is 12,750 medals. The company normally charges $120 per medal. Cost data for the current level of production are shown below:

    The company has just received a special one-time order for 700 medals at $83 each. For this particular order, no variable selling and administrative costs would be incurred. This order would also have no effect on fixed costs.

    Required:
    Should the company accept this special order? Why?

    © BrainMass Inc. brainmass.com June 3, 2020, 10:08 pm ad1c9bdddf
    https://brainmass.com/business/asset-turnover/divison-margin-turnover-roi-and-ri-217401

    Attachments

    Solution Preview

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

    Required:
    a. What is the division's margin?

    Margin = operating income / sales

    = $609,840 / $10,890,000
    =5.6%

    b. What is the division's turnover?

    Turnover = Sales / Operating Assets

    = $10,890,000 / $3,000,000
    = 3.63

    c. What is the division's return on investment (ROI)?

    ROI = Net Income / Operating Assets
    = ...

    $2.19

    ADVERTISEMENT