A Company Had Net Sales of $230,000 for 2010 and $288,000

question 48

Essay

A company had net sales of $230,000 for 2010 and $288,000 for 2011. The company's average total assets for 2010 were $150,000 and $180,000 for 2011. Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

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Definitions:

Machine-Hours

A measure of the amount of time machines are utilized during the production process.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or services, calculated before the period begins based on estimated costs and activity levels.

Machine-Hours

A unit of measure representing the operational time of a machine, used in calculating manufacturing costs and efficiency.

Overhead Applied

The estimated overhead cost assigned to each unit of product manufactured based on a predetermined rate.