Kristen Roper Oversees Her Company's Largest and Most Profitable Investment

question 38

Essay

Kristen Roper oversees her company's largest and most profitable investment center. She has asked you, as her staff accountant, to compute the center's ROI, residual income, and EVA for the month of August 20xx, using the following information (rounded to two decimal places):
$\begin{array}{lr}\text { August 20xx Pretax operating income } & \$ 300,000 \\\text { August 20xx sales } & 450,000 \\\text { Assets at July 31, 20xx } & 500,000 \\\text { Assets at August 31, 20xx } & 510,000 \\\text { August 20xx income taxes } & 90,000 \\\text { Current liabilities at August 31, 20xx } & 250,000 \\\text { Cost of capital } & 19 \% \\\text { Desired ROI } & 52 \% \\\hline\end{array}$

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Definitions:

Resale Revenue

Income generated from selling a product or service that has been purchased or acquired from another entity.

Recycling Revenue

Recycling revenue refers to the income generated from collecting, processing, and selling recycled materials, which can significantly contribute to an organization's or municipality's financial health and sustainability efforts.

Processing Cost

The expenses involved in the operation of transforming raw materials into finished products, including labor, utilities, and equipment depreciation.

Disposal Cost

The expenses associated with getting rid of waste products or obsolete inventory from a business.