Financial and Managerial Accounting (Looseleaf) (Custom Package)
Financial and Managerial Accounting (Looseleaf) (Custom Package)
6th Edition
ISBN: 9781259754883
Author: Wild
Publisher: MCG
Question
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Chapter 22, Problem 21E

1.

To determine

To compute: Profit margin.

1.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate profit margin,

    ProfitMargin= NetIncome TotalRevenue ×100 ..................(1)

Professional products:

Given,
Net income is €552.
Total revenue is €2,717.

Substitute, €552 for net income and €2,717 for total revenue in the above equation (1).

    Profitmargin= 552 2,717 ×100 =20.31%

Hence, profit margin is 20.31%.

Consumer products:

Given,
Net income is €1,765.
Total revenue is €9.530.

Substitute, €1,765 for net income and €9,530 for total revenue in the above equation (1).

    Profitmargin= 1,765 9,530 ×100 =18.52%

Hence, profit margin is 18.52%.

Luxury products:

Given,
Net income is €791.
Total revenue is €4,507.

Substitute, €791 for net income and €4,507 for total revenue in the above equation (1).

    Profitmargin= 791 4,507 ×100 17.55%

Hence, profit margin is 17.55%.

Active cosmetics:

Given,
Net income is €278.
Total revenue is €1,386.

Substitute, €278 for net income and €1,386 for total revenue in the above equation (1).

    Profitmargin= 278 1,386 ×100 =20.05%

Hence, profit margin is 20.05%.

Hence, professional products division has the highest profit margin of 20.31%.

2.

To determine

To compute: Investment turnover.

2.

Expert Solution
Check Mark

Explanation of Solution

Formula to calculate investment turnover,

    Investmentturnover= Sales Averageinvestedassets ..............(2)

Professional products:

Given,
Sales are €2,717.
Average assets invested are €2,570.

Substitute, €2,717 for sales and €2,570 for average assets invested in the above equation (2).

    Investmentturnover= 2,717 2,570 =1.05

Hence, investment turnover is 1.05.

Working notes:

Calculation for average assets,

    Average assets= Beginning asset balance+Ending asset balance 2 = 2,516+2,624 2 =2,570

Consumer products:

Given,
Sales are €9,530.
Average assets invested are €5,745.

Substitute, €9,530 for sales and €5,745 for average assets invested in the above equation (2).

    Investmentturnover= 9,530 5,745 =1.65

Hence, investment turnover is 1.65.

Working notes:

Calculation for average assets,

    Average assets= Beginning asset balance+Ending asset balance 2 = 5,496+5,994 2 =5,745

Luxury products:

Given,
Sales are €4,507.
Average assets invested are €3,855.

Substitute, €4,507 for sales and €3,855 for average assets invested in the above equation (2).

    Investmentturnover= 4,507 3,855 =1.17

Hence, investment turnover is 1.17.

Working notes:

Calculation for average assets,

    Average assets= Beginning asset balance+Ending asset balance 2 = 4,059+3,651 2 =3,855

Active cosmetics:

Given,
Sales are €1,386.
Average assets invested are €823.5.

Substitute, €1,386 for sales and €823.5 for average assets invested in the above equation (2).

    Investmentturnover= 1,386 823.5 =1.68

Hence, investment turnover is 1.68.

Working notes:

Calculation for average assets,

    Average assets= Beginning asset balance+Ending asset balance 2 = 817+830 2 =823.5

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Chapter 22 Solutions

Financial and Managerial Accounting (Looseleaf) (Custom Package)

Ch. 22 - 6. What are two main goals in managerial...Ch. 22 - Prob. 7DQCh. 22 - Prob. 8DQCh. 22 - Prob. 9DQCh. 22 - Prob. 10DQCh. 22 - Prob. 11DQCh. 22 - Prob. 12DQCh. 22 - Prob. 13DQCh. 22 - Prob. 14DQCh. 22 - Prob. 15DQCh. 22 - Prob. 16DQCh. 22 - Prob. 17DQCh. 22 - Prob. 18DQCh. 22 - Prob. 19DQCh. 22 - Prob. 20DQCh. 22 - Prob. 1QSCh. 22 - Prob. 2QSCh. 22 - Prob. 3QSCh. 22 - Allocation and measurement terms C1 In each blank...Ch. 22 - Prob. 5QSCh. 22 - Prob. 6QSCh. 22 - Prob. 7QSCh. 22 - Prob. 8QSCh. 22 - Computing return on investment A1 Compute return...Ch. 22 - Computing residual income A1 Refer to the...Ch. 22 - Prob. 11QSCh. 22 - Computing profit margin and investment turnover A2...Ch. 22 - QS 22-13 Performance measures- balanced...Ch. 22 - Prob. 14QSCh. 22 - Prob. 15QSCh. 22 - Prob. 16QSCh. 22 - Prob. 17QSCh. 22 - Prob. 18QSCh. 22 - Prob. 19QSCh. 22 - Prob. 1ECh. 22 - Prob. 2ECh. 22 - Prob. 3ECh. 22 - Prob. 4ECh. 22 - Prob. 5ECh. 22 - Prob. 6ECh. 22 - Prob. 7ECh. 22 - Prob. 8ECh. 22 - Prob. 9ECh. 22 - Prob. 10ECh. 22 - Prob. 11ECh. 22 - Prob. 12ECh. 22 - Prob. 13ECh. 22 - Prob. 14ECh. 22 - Exercise 22-16 Performance measures-balanced...Ch. 22 - Prob. 16ECh. 22 - Prob. 17ECh. 22 - Prob. 18ECh. 22 - Prob. 19ECh. 22 - Prob. 20ECh. 22 - Prob. 21ECh. 22 - Prob. 1PSACh. 22 - Prob. 2PSACh. 22 - Prob. 3PSACh. 22 - Prob. 4PSACh. 22 - Prob. 5PSACh. 22 - Prob. 1PSBCh. 22 - Prob. 2PSBCh. 22 - Prob. 3PSBCh. 22 - Prob. 4PSBCh. 22 - Prob. 5PSBCh. 22 - Santana Rey’s two departments, computer consulting...Ch. 22 - Prob. 1BTNCh. 22 - Prob. 2BTNCh. 22 - Prob. 3BTNCh. 22 - Prob. 4BTNCh. 22 - Prob. 5BTNCh. 22 - Prob. 6BTNCh. 22 - Prob. 7BTNCh. 22 - Prob. 8BTNCh. 22 - Prob. 9BTN
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