Santa Corporation
NOTE: These Multiple Choice Questions Require Present Value

question 33

Multiple Choice

Santa Corporation
NOTE: These multiple choice questions require present value information.
Santa Corporation manufactures Christmas decorations and supplies throughout the world.The company owns property, plants, and equipment and also enters into operating leases for certain facilities.Assume that Santa's incremental borrowing rate is 8%.The company's tax rate is 40%.Listed below are selected financial data for Santa and a portion of the company's operating lease footnote.
$\begin{array}{lrrr}&2012&2011&2010\\\text { Property, Plant, \& Equipment (net) } & \$ 882,468 & \$ 717,453 & \$ 658,214 \\\text { Total Assets } & 1,756,854 & 1,405,484 & 1,254,896 \\\text { Common Shareholders' Equity } & 867,992 & 652,626 & 587,951\end{array}$


$\begin{array}{lrrrr}\text { Sales } & \$ 2,922,915 & \$ 2,415,632 & \\\text { Cost of Goods Sold } & 2,016,811 & 1,642,630 & \\\text { Depreciation Expense } & 78,584 & 67,542 & \\\text { Interest Expense } & 106,663 & 90,343 & \\\text { Net Income } & 248,448 & 217,407 &\end{array}$

sante corp.
Operatine Laraca Disclasure (anounts in thausands)
Operating Lease Camnitsents at the end of 2012
$\begin{array}{rc}{\text { Year }} & \text { Reported Lease Commitments } \\\hline 2013 & \$ 148,239 \\2014 & \$ 252,800 \\2015 & \$ 278,327 \\2016 & \$ 279,210 \\2017 & \$ 285,452 \\\text { Beyond } 2017 & \$ 2471,600\end{array}$

-Using the information provided by Santa Corporation,calculate the company's 2012 fixed asset ratio.

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Definitions:

Fixed Overhead Costs

Regular, unchanged costs incurred by a business, regardless of its level of production or activity, such as rent and salaries.

Control Perspective

An approach focusing on the monitoring and adjusting of processes and strategies to achieve desired outcomes or objectives.

Revenue Variance

The difference between how much the revenue should have been, given the actual level of activity, and the actual revenue for the period. A favorable (unfavorable) revenue variance occurs because the revenue is higher (lower) than expected, given the actual level of activity for the period.

Cost Variance

The difference between the expected cost of a project or production process and the actual cost incurred.