Current Year Prior Year (Amounts in thousands) Sales $33,700 $24,750 Cost of goods sold 21,905 16,830 Gross profit $11,795 $7,920 Expenses: Wages $8,800 $6,188 Utilities 650 300 Repairs 169 300 Selling 507 100 Total Expenses $10,126 $6,888 Operating income ? ? Operating income % Total assets investment base) $4,600 $1,500 Return on investment ? Residual income (8% cost of capital) ? A

Current Year Prior Year (Amounts in thousands) Sales $33,700 $24,750 Cost of goods sold 21,905 16,830 Gross profit $11,795 $7,920 Expenses: Wages $8,800 $6,188 Utilities 650 300 Repairs 169 300 Selling 507 100 Total Expenses $10,126 $6,888 Operating income ? ? Operating income % Total assets investment base) $4,600 $1,500 Return on investment ? Residual income (8% cost of capital) ? A. Determine the operating income (loss) (dollars) for each year. If required round final answers to two decimal places. Current Year Prior Year Operating income (loss) $ B. Determine the operating income (loss) (percentage) for each year. If required round final answers to two decimal places. Current Year Prior Year Operating income (loss) % % c. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? If required round final answers to two decimal places. Current Year Prior Year Return on investment % D. Assuming an 8% cost of capital, calculate the residual income for each year. Do not round intermediate computations and round final answers to nearest whole dollar. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Current Year Prior Year Residual income The residual income related to the investment in the current year. This with the ROI results. Management consider both methods in their analysis of the investment.