The Marine Division of Pacific Corp

question 92

Essay

The Marine Division of Pacific Corp.has average invested assets of $110,000,000.Sales revenue of $50,250,000 results in an operating income of $9,967,000.The hurdle rate is 7%.
a.Calculate the return on investment.
b.Calculate the profit margin.
c.Calculate the investment turnover.
d.Calculate the residual income.

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Definitions:

Special Order

A one-time customer order often involving a large quantity and possibly requiring adjustments to standard pricing or production processes.

Variable Manufacturing Cost

Costs that vary in direct proportion to changes in production volume, such as raw materials and direct labor.

Variable Selling Cost

Variable selling costs fluctuate with sales volume; they include expenses such as commission and shipping that increase with higher sales.

Constrained Resource

A limited resource within a system that significantly affects the throughput or output of the system.