Problem 10-27 (Part Level Submission) Sanders Siding produces and sells two prod

Question

Problem 10-27 (Part Level Submission) Sanders Siding produces and sells two products-aluminum and vinyl. Each of these products is made in a dedicated manufacturing facility, and the product line managers are evaluated based on the product line's return on investment. The following data is from the most recent year of operations. AluminumViny Sales $4,000,000 $3,000,000 1,800,000 1,800,000 Direct fixed costs 1,500,000 900,000 2,000,000 1,200,000 Variable costs Average assets (a1) Your answer is correct. Calculate the margin and asset turnover for each product line. (Round answers to 2 decimal places, e.g. 5.12 and 5.1290.) Aluminum Vinyl 17.5 10 Margin Asset turnover Click if you would like to Show Work for this question: 2.5 Open Show Work

Explanation / Answer

Ans. Operating income $770000 *Calculation: Assets turnover = Sales / Average operating assets 2.2 = Sales / 2000000 Sales = 2000000 * 2.2 Sales = 4400000 Operating income = Sales * Margin 4400000 * 17.5% 770000 Ans. New ROI   =   38.50% New ROI = New operating income / Average operating assets * 100 770000 / 2000000 * 100 38.50%

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