When do many companies expect to have a net loss
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The amount allocated to ending inventory is $3664.
LIFO is an inventory method that means last in, first out. It means that it is assumed that the latest inventory that is sold, is the first to be sold. Ending inventory is made up of inventory that is purchased eelier.
- Total inventory sold = 40 + 26 = 68 units
- Sum of total inventory bought and beginning inventory = 10 + 60 + 30 = 100
- Ending inventory = 100 - 68 = 32
- Value of ending inventory = (22 x $112) + (10 x $120)
$2464 + $1200 = $3664
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Answer:
profit margin: 6.04%
Assets turnover: 2.08
ROI 25.89%
Residual Income 137,330
Explanation:
<u><em>profit margin:</em></u>
income/sales = 326,480/5,404,000 = 0.060414507 = 6.0414507%
<u><em>Assets turnover:</em></u>
(2,561,000 + 2,629,000)/2 = 2,595,000 average assets
5,404,000/2,595,000 = 2.082466281 Assets TO
<u><em>ROI</em></u>
(1,206,000+1,316,000)/2 = 1,261,000 average equity
326,480/1,261,000 = 25.890563%
<u>Residual Income:</u>
current income - income at desired RoR
That means calculate which income generates a ROI of 15% which is the minimum required return:
ROI = income / equity = 0.15
X/1,261,000 = 0.15
X=1,261,000 x 0.15 = 189,150
Now we calculate the diference between this number and the current income.
326,480 - 189,150 = 137,330 Residual Income