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Beaker Company
Statement of Financial Position

	Beginning	Ending
	Balance	Balance
Assets
Cash	$50,000	$70,000
Accounts receivable	20,000	25,000
Inventory	30,000	35,000
Plant and Equipment (net)	120,000	110,000
Investment in Cedar Company	80,000	100,000
Land (undeveloped)	170,000	170,000
Total Assets	$470,000	510,000

Liabilities and Owners' Equity
Accounts payable	$70,000	$90,000
Long-term debt	250,000	250,000
Owner's equity	150,000	170,000
Total liabilities and owner's equity	$470,000	$510,000

Beaker Company
Income Statement

Sales		$414,000
Less Operating Expenses		351,900
Net Operating Income		62,100
Less Interest and Taxes
Interest Expense	$30,000
Tax Expense	10,000	40,000
Net Income		$22,000

The company paid dividends of $2,100 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.

Required:

i. Compute the company's margin, turnover, and return on investment for last year.

ii. The board of directors of Beaker Company has set a minimum required return of 20%. What was the company's residual income last year?

Question 2.

Sales	$30,000,000
Net Operating income	$1,170,000
Average operating assets	$8,000,000
The company's minimum required rate of return	18%

Question 3.

Sales	$480,000
Variable Expenses	$202,000
Fixed Manufacturing Expenses	$158,000
Fixed Selling and Administrative Expenses	$130,000

Question 4.

	Per Unit
Direct Materials	$2.80
Direct Labor	$6.30
Variable Overhead	$8.50
Supervisor's Salary	$2.60
Depreciation of Special Equipment	$6.80
Allocated General Overhead	$6.10