When a business makes an investment, it is expecting a Stream of costs O Stream of profits O Capital expenditure O Discount on future purchases Question 86 in return.
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- Consider the following information for a given business. Sale revenue =GHS40,000 VC per unit =GHS20 Activity level =1,000 to break even Required: 1. Determine the TFC 2. Express the contribution as a percentage of sale. 3. The company plans to sale 1,500 unit in the next period. What will be the percentage margin of safety (MoS) 4. What margin should the business employ for planning purposes? 5. What total profit should the business expect in order to achieve it's planned sales?Use the following information to answer the questions. Company X $ 12,480,000 $ 3,120,000 561,600 8.00% Company Y $ 28,480,000 $ 7,120,000 2$ Company Z $ 20,480,000 $ 5,120,000 532,480 Sales Average operating assets Net operating income Minimum required rate of return $ 512,640 8.50% 10.40% Required: 1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each company. 3. Each company is presented with an investment opportunity that would yield a 9% rate of return. a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment opportunity. b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the investment opportunity. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req ЗA Req 3B Each company is presented with an investment…D 2) Contribution Margin The following information is supplied about one of the company’s main products and management wants to analyse the contribution that this product is making to the overall profitability of the company. You are asked to determine the following: The Contribution Margin Ratio of the product The Break Even Point in dollars for the product The Margin of Safety in Units and Dollars If the company wishes to increase its total dollar contribution margin by 40% in the next year, by how much will sales need to be increased if all the other costs remain the same.
- Question 3: Oman Company's financial information is given in the table below. Year Sales (OMR) Fixed Costs 445000 Variable Costs : 2020 105000 245000 2021 500000 150000 280000 You are required to calculate the following values for each year. The years are independent of each other. a) P/V ratio, b) В.Е.P. c) Sales required to earn a profit of OMR 45000. d) Margin of safety at a profit of OMR 50000 e) Profit when sales are OMR. 300000.Use the following information to answer the questions. Company X $ 12,480,000 $ 3,120,000 $ Company Y $ 28,480,000 $ 7,120,000 512,640 8.50% Company Z $ 20,480,000 $ 5,120,000 532,480 10.40% Sales Average operating assets Net operating income Minimum required rate of return 561,600 8.00% Required: 1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each company. 3. Each company is presented with an investment opportunity that would yield a 9% rate of return. a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment opportunity. b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the investment opportunity. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg ЗA Req 3B Compute the return on investment (ROI) for each company…Question 3: Şahar Company's financial information is given in the table below. Year Sales (OMR) | Fixed Costs Variable Costs 2019 405000 90000 225000 2020 450000 120000 240000 Calculate: a) P/V ratio, b) B.E.P. c) Sales required to earn a profit of OMR 40000. d) Margin of safety at a profit of OMR 50000 e) Profit when sales are OMR. 200000.
- Megamart provides the following information on its two investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 Income $ 3,173,000 2,286,000 Average Assets $ 16,700,000 12,700,000 Exercise 22-11 (Algo) Computing profit margin and investment turnover LO A2 Compute profit margin and investment turnover for each center. Which center generates more income per dollar of sales? Which center has the better investment turnover?PROBLEM 2. Outlast Company's projected profit for the coming year follows: Per Unit Total P200,000 (120,000) 80,000 (64,000) P 16,000 Sales P20 Less: Variable costs (12) Contribution margin Less Fixed expenses P 8 Income Requirements: 1. Compute the breakeven point in units. 2. How many units must be sold to earn a profit of P30,000? 3. Compute the additional profit that Outlast would eari sales were P25,000 more than expected.Tutorial Q. 5 Assuming that the cost structure and selling prices remain the same in Periods I and II, as given below: Period Sales (RM) Profit (RM) 1 240,000 18,000 2 280,000 26,000 a. Now find out what is the profit when sales are RM200,000, additionally calculate the sales required to earn a profit of RM40,000. b. Margin of safety at a profit of RM30,000 c. Variable cost in Period II.
- Question 3:salalah Company's financial information is given in the table below. Year 2020 Sales (OMR) Fixed Costs 445000 Variable Costs: 105000 245000 2021 500000 150000 280000 You are required to calculate the following values for each year. The years are independent of each other. a) P/V ratio, b) В.Е.Р. c) Sales required to earn a profit of OMR 45000. d) Margin of safety at a profit of OMR 50000 e) Profit when sales are OMR. 300000.2. Analysis of an expansion project Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of Fox Co.: Fox Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Year 4 Unit sales 4,800 5,100 5,000 5,120 Sales price $22.33 $23.45 $23.85 $24.45 Variable cost per unit $9.45 $10.85 $11.95 $12.00 Fixed operating costs except depreciation $32,500 $33,450 $34,950 $34,875 Accelerated depreciation rate 33% 45% 15% 7% This project will require an investment of $25,000 in new equipment. The equipment will have no salvage value at the end of the project’s four-year life. Fox pays a constant tax rate of 40%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project’s net present value (NPV) would be when using accelerated depreciation. Determine what the project’s net present…Question 3: Sohar Company's financial information is given in the table below. Year Sales (OMR) Fixed Costs Variable Costs 2019 405000 90000 225000 2020 450000 120000 240000 Calculate: a) P/V ratio, b) В.Е.Р. c) Sales required to earn a profit of OMR 40000. d) Margin of safety at a profit of OMR 50000 Profit when sales are OMR. 200000. e)