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Homework answers / question archive / The following data pertain to the Waley Division of Northern Industries
The following data pertain to the Waley Division of Northern Industries.
the margin at Waley was exactly the same in Year 2 as it was in Year 1.
-ear 1 Year 2 Sales $300_,000 $600 J)00 Stoddioldcrs- c-quitv (,)f S-40_000 craggy operating assets aria ...... ...... ...... tr) 1.2 Rt_An-rn on ill\ estmnt hminu m rectutred rate of return Residual in me 10,00,)
The average operating assets for Year 2 amounted to:
A.
$400,000
B.
$800,000
C.
$600,000
D.
$500,00
Computation of Average Operating Assets:
Average Operating Assets = Net Operating Income/Return on Investment
Here,
Profit Margin = Return on Investment/Turnover = 9.6%/1.2 = 8%
Net Operating Income = Sales*Profit Margin = $600,000*8% = $48,000
Average Operating Assets = $48,000/9.6% = $500,000
So, the correct option is D "$500,000".
