Answer: a. The firm must purchase lumpy assets to achieve the increase in sales.
Explanation:
EvenFlo Pipes needs to sell more pipes in order to see an increase in sales. Assuming they are the producers, they will need to produce more pipes than they have been doing and this will need them to increase their production capacity.
To do so they would have to invest in fixed assets as these are what produce pipes. This is why the firm will have to purchase lumpy assets that will help them produce and sell more pipes.
Answer:
ROI = net profit / total investment
1. What is the current return on investment (ROI) being realized by your division
- ROI = $625,000 / $4,150,000 = 15.06%
2. What would happen to the near-term ROI of your division after adding the effect of the new investment?
- ROI = ($625,000 + $50,000) / ($4,150,000 + $550,000) = 14.36%
If you carry out the new project the ROI of your division will decrease.
3. As manager of this division, given your incentive compensation plan, would you be motivated to make the new investment?
- Even though the new project's return (9.1%) is considered acceptable by upper management, you will probably reject it since it will decrease your division's total ROI. When managers are assigned bonuses based on certain achievements, reducing your profitability ratio will probably result in no bonus.
Explanation:
The adjusting entry is as follows
Insurance expense A/c Dr $4,800
To Prepaid insurance A/c $4,800
(Being the insurance expense is recorded)
The computation is shown below:
= Beginning balance + debited amount - unexpired insurance amount
= $6,600 + $2,300 - $4,100
= $4,800
So while preparing the adjusting entry, we debited the insurance expense account and credited the prepaid insurance account
I'm guessing it's like half of that.
So 3%.
However, I saw online 4.9 %
