1. Aguilera Industries is a division of a major corporation. Data concerning the
ID: 2391410 • Letter: 1
Question
1. Aguilera Industries is a division of a major corporation. Data concerning the most recent year appears below:
15.63
3.30
0.21
4.74
1b. Aguilera Industries is a division of a major corporation. Data concerning the most recent year appears below:
The division's return on investment (ROI) is closest to: (Round your answer to 2 decimal places.)
3.90%
16.35%
12.50%
.90%
1c. The management of Fannin Corporation is considering dropping product H58S. Data from the company's accounting system appear below:
In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $247,000 of the fixed manufacturing expenses and $208,000 of the fixed selling and administrative expenses are avoidable if product H58S is discontinued. What would be the effect on the company's overall net operating income if product H58S were dropped?
Overall net operating income would decrease by $39,000.
Overall net operating income would increase by $39,000.
Overall net operating income would increase by $140,000.
Overall net operating income would decrease by $140,000.
1d. Chee Corporation has gathered the following data on a proposed investment project: (Ignore income taxes in this problem.)
The payback period for the investment is closest to:
0.1 years
1.0 years
4.8 years
6.8 years
1. Aguilera Industries is a division of a major corporation. Data concerning the most recent year appears below:
Explanation / Answer
1 Turnover = Sales/ Average operating assets = 18310000/5550000= 3.30 2 Return on investment (ROI) = Net operating income /Average operating assets = 712920/4360000= 16.35% 3 Loss in contribution margin -595000 =395000-990000 Avoudable fixed costs 455000 =247000+208000 Net operating income change -140000 Overall net operating income would decrease by $140,000. 4 Payback period = 410000/60000 = 6.8 years
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