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iogann1982 [59]
3 years ago
13

Assuming that there are no income taxes, what would be the ROI and residual income, respectively, for this equipment, which has

an average value of US $100,000?
Business
1 answer:
anygoal [31]3 years ago
5 0

Please see complete question below :

CPA-08299: Managers of the Doggie Food Co. want to add a bonus component to their compensation plan. They are trying to decide between return on investment (ROI) and residual income (RI) as the performance measure they will use. If Doggie adopts the RI performance measure, the relevant required rate of return would be 18%. One segment of Doggie is the Good Treats division, where the manager has invested in new equipment. The operating results from this equipment are as follows:

Revenues $ 80,000

Cost of goods sold 45,000

General and administrative expenses 15,000

Assuming that there are no income taxes, what would be the ROI and RI for this equipment that has an average value of $100,000?

ROI RI

Answer:

ROI =  20% and RI = $2000

Explanation:

Return On Investment(ROI) = Profit before Interest & Tax/Average Investment

Profit before Interest & Tax (PBIT) = Revenue -cost of goods sold- General & Adm expenses

PBIT= $ 80,000 - $45,000 -$15,000

      = $20,000

ROI = ($20,000/100,000) * 100% = 20%

Residual Income = PBIT - (Average Investment* Required Rate of Return)

                            =$20,000- (18%* 100,000)

                           =$20,000- $18,000

                           = $2000

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the processes by which money enters into circulation the buying and selling of government securities to alter the supply of money

Explanation:

Open market operations are one of the tools that the Fed uses to regulate the supply of money and credit in the economy. It entails buying or selling if securities in the market to either increase or decrease the amount of money in circulation. Open market operations can be used for either expansionary or contractionary policies.

Should the Fed observe that the economy is slowing down, it may result in buying securities and bonds from the banks.  The act of buying increases the cash available for in the banks. If the reserves are constant, it means banks will be holding excess cash.  Banks will resort to lending to firms and individuals, which increases the money supply in the market.

6 0
3 years ago
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A company normally sells its product for $20 per unit. However, the selling price has fallen to $15 per unit. This company's cur
nata0808 [166]

Answer:

$200 (a deduction)

Explanation:

The accounting standard for inventories IAS 2 requires that inventory be carried at the lower of cost or net realizable value. Inventory will initially be recognized at the cost ( which includes the cost of the item and other associated cost such as freight ). However, its carrying amount must be reviewed to ensure it is not higher than the realizable value.

Given that the selling price is now $15 which is lower than the cost of $16, it means that the amount that can be realized from the sale of a unit is $15.

= $16 - $15

= $1

As such, an adjustment in form of a reduction of the carrying amount of $1 per unit is required. The amount of the lower cost of market adjustment the company must make as a result of this decline in value

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8 0
2 years ago
Last year, Kurt invested $1,000 in ABC stock, $1,000 in long-term government bonds, and $1,000 in U.S. Treasury bills. Over the
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Explanation:

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3 years ago
On January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. Th
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Explanation:

Cost of machine - $80000

Useful life - 5 years

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Depreciable amount = 80000-5000= 75000

Annual depreciation = 75000/5 = 15000

Year                    DR                       Accum Dep

Cost                                                                                   8000                  

1                Depreciation 15000       15000  

2               Depreciation  15000      30000

Year 3      Depreciation  15000      45000

Year 4      Depreciation   15000      60000

Year 5      Depreciation   15000      75000

Financial statement template

Balanced sheet

Cash asset + Non cash asset = liabilities + Equity

Cash asset + 65000  = liabilities + equity

Income statement

Revenue - expenses = Net income

Revenue - 15000 - Net Income

3 0
3 years ago
The u.s. dollar exchange rate increased from ​$0.960.96 canadian in june 2011june 2011 to ​$1.031.03 canadian in june 2012june 2
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Given that <span>the U.S. dollar exchange rate increased from $0.96 Canadian in June 2011 to ​$1.03 Canadian in June 2012​, and it decreased from 81 Japanese Yen in June 2011 to 78 Japanese Yen in June 2012.

Between June 2011 and June 2012​, the U.S. dollar​ appreciated against the Canadian dollar.

Between June 2011 and June 2012​, the U.S. dollar​ depreciated against the Japanese Yen.</span>
8 0
3 years ago
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