be $4 680,000. cost of goods sold wis be $2.904 000 and operating expenses for t

Question

be $4 680,000. cost of goods sold wis be $2.904 000 and operating expenses for thn levet of sales wil be $468 ,000 ievesment in the store assets thwoughout te year is 35,375 100 bebre comsadering the folowing proposa A sepresentative of Ace Apptiances approached the manager about camying Ace's line of applances. Ths ine is expected to generate $1.350 000 n sales in the coming year at Hy's Bone slore with a menchande cot o t 0 store will sot harve to invest in any invenoy The cest or hoor planning would be $121,500 per year hy's maginal cost of cappeal is 8 percent lgnore tanes Required adsona merchandse line sotal $153 000 To carry the ine of goods, an inventory nvessment of 990 000 theoughout te yea s requred Ace is wiing lo foor pan te merchandoe so har he Fy a, what s Hysbne stres opected RO?the conngye" "does not carry Aces appare es,"-"Ror answer sapete tageronded to 2 decou places(L..se tng proft e. What weuls e snes expecios RCI be ithe manager elected to take the floor plan opion? (EnterROr answer as a percentage roundes to 2 decimal places o., 3216)

Explanation / Answer

According to policy first four parts will be answered

Part A

Operating profit = sales - cost of goods sold - operating expenses =4680000-2934000-468000=1278000

Investment =3375000

ROI =operating profit /investment =1278000/3375000=37.87%

Part B

Operating profit = operating profit without Ace's appliances + operating profit of Ace's appliances =1278000 +(1350000-1026000-153000)=1449000

Investment = investment without Ace's appliances + investment of Ace's appliances =3375000+990000=4365000

ROI = operating profit / investment =1449000/4365000=33.20%

Part C

Expected ROl = 39.33%

Part D answer is option A because ROI of floor plan is the highest

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