Answer:
$14,960
Explanation:
Data provided in the question:
Sales = $630,000
Cost of goods sold = 380,000
Gross margin = $250,000
Selling and administrative expense = 174,400
Operating income = $75,600
Income taxes (@ 40%) = 30,240
Net income i.e After tax income = $45,360
Total capital employed = $380,000
East Mullett's actual cost of capital = 8 percent
Now,
EVA for East Mullett Manufacturing
= After tax income - [ Actual cost of capital × Total capital employed ]
= $45,360 - [ 8% × $380,000 ]
= $45,360 - $30,400
= $14,960
