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Van Bosch Inc

question 32

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Van Bosch Inc.is considering selling to a group of new customers that will bring in sales of $20,000 with a return on sales of 7%.The only new investment will be in accounts receivable.Waldron has a turnover ratio of 4 to 1 between sales and accounts receivable.What is the return on investment?


Definitions:

Activity Driver

A factor that influences or contributes to the expense of certain business operations, often used in activity-based costing.

High-volume Product Lines

Product categories within a company that produce or sell in large quantities, typically generating significant portions of revenue.

Cost Distortion

An inaccurate allocation of costs to products, often resulting from traditional costing methods that can overstate or understate the true costs of goods.

Activity-based Costing Systems

A method in accounting that assigns costs to products or services based on the activities that go into producing them, aiming to provide more accurate costing.

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