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Using this budget Compute the return on investment, residual income

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Budget Data;Units Budgeted $ Budgeted Units Actual;Production;Mid-Grade 2,585 2,800;High-End 517 400;Direct Materials ($)/Unit;Mid-Grade 140.00;High-End 250.00;Direct Labor ($/HR)/Unit 15.00;Labor Time (Hrs)/Unit;Mid-Grade 20.00 21.50;High-End 30.00 28.00;Direct Cost/Unit;Mid-Grade 440.00;High-End 700.00;Price/Unit;Mid-Grade 509.00;High-End 879.00;Plant Overhead/Yr;Salaries 50,000;Utilities 9,000;Benefits 10%;Insurance 3,000;Property Taxes 975;Depreciation 50,000;Supplies 6,000;Income Tax Expense 42.00% -;Variance Analysis - June;Units Budgeted $ Budgeted Units Actual $ Budget-Flex $ Actual Var-Flex Var-Gross;Revenue;High-End 517 454,443 421 370,059 351,556 (18,503) (102,887);Mid-Grade 2,585 1,315,765 2,787 1,418,583 1,418,583 - 102,818;Total Revenue 1,770,208 1,788,642 1,770,139 (18,503) (69);Cost of Goods;High-End 129,250 225.00 105,250 94,725 10,525 34,525;Mid-Grade 361,900 142.25 390,180 396,451 (6,271) (34,551);Total Cost of Goods 491,150 495,430 491,176 4,254 (26);Net Revenue 1,279,058 1,293,212 1,278,963 (14,249) (95);Labor Wages 1,008,150 15.02 1,025,550 1,077,222 (51,672) (69,072);Office Salaries 50,000 50,000 52,500 (2,500) (2,500);Benefits 105,815 107,555 112,972 (5,417) (7,157);Supplies 6,000 6,000 5975 25 25;Utilities 9,000 9,000 9100 (100) (100);Insurance 3,000 3,000 3000 - -;Property Taxes 975 975 975 - -;Total Operating Expense 1,182,940 1,202,080 1,261,745 (59,665) (78,805);Earnings before Taxes & Depr 96,118 91,132 17,219 (73,913) (78,899);Deprecition 50,000 50,000 50,000 - -;Earnings before Taxes 46,118 41,132 (32,781) (73,913) (78,899);Income Taxes 19,370 17,275 (13,768) 31,044 33,138;Net Earnings 26,748 23,857 (19,013) (42,870) (45,762);Sales Forecast;Budget=> January February March April May June;High-End 467 477 487 497 507 517;Mid-Grade 2458 2483 2508 2533 2559 2,585;Actual=>;High-End 470 456 442 429 416 421;Mid-Grade 2460 2522 2585 2650 2716 2787;Using this budget Compute the return on investment, residual income, and economic value added for the current situation "

 

Paper#26491 | Written in 18-Jul-2015

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