Book Problems handout GO 10This is a new quiz that adds ten points to total avai
ID: 2571706 • Letter: B
Question
Book Problems handout GO 10This is a new quiz that adds ten points to total available Group Qala S 10 points 12-05 Aect 204 Use the following information for the next two questions Post Division: 300,000 posts 23,000 posts Quantity demanded by outside customers Quantity wanted by Lamp Division $20.25 $14.45 s.45 Selling price per post to outside customers Variable cost per post Fixed operating costs per unit (at capacity) I. If capacity is 300,000 and $2.25 of the total variable cost can be avoided oe an intracompany sale, calculate the minimum transfer price per post that the Post division should charge the Lamp Division. B. $14.45 C. $12.20 1265 E. S18.00 A. $20.25 2. If capacity is 400,000 and S4.25 of the total variable cost can be avoided on an intracompany sale, calculate the minimum transfer price per post that the Post division should charge the Lamp Division. C. $14.45D. $14.90 E. $16.00 A. $20.25 B. $10.20 Use the following for the next three questions The Delta Company reports the following 15% $250,000 $125,000 Margin Turnover Average operating assets Net operating income Stockholders equity S 57,000 $100,000 $525,000 Sales RoI 31.5% 3. Calculate average operating assets for A. $200,000 B. $600,000 4Calculate ROI in Year 1 A.285% C. $300,000 D. $150,000 E. $250,000 B. 16.7% C. 95% D.31.5% E, 28.7% 5. Calculate residual income in Year2 if the company's expected rate of return is 25%. AS18,250 B. $78,750 C. $62.500 D. $16.250E.$15.786Explanation / Answer
1. Minimum Transfer Price = $20.25 - $2.25
...........................................= $18
Correct answer is Option E i.e. $18.00
2. Minimum Transfer Price = $14.45 - $4.25
...........................................= $10.2
Correct answer is Option B i.e. $10.20
3. Average operating assets = Sales / Turnover
..............................................= $600,000 / 3
..............................................= $200,000
Correct answer is Option A i.e. $200,000
4. ROI = Net operating Income / Net Operating Asset
............= $57,000 / $200,000
...........= 28.5%
Correct answer is Option A i.e. 28.5%
5. Net Operating Income = $250,000 x 31.5%
.........................................= $78,750
Residual Income = Net Operating Income - (Minimum required rate of return x Average operating assets)
............................= $78,750 - (25% x $250,000)
............................= $16,250
Correct answer is Option D i.e. $16,250