1. Megamart, a retailer of consumer goods, provides the following information on
ID: 2578735 • Letter: 1
Question
1.
Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).
2.
Oakwood Company produces maple bookcases to customer order. The following information is available for the production of the bookcases.
Required:
1. Compute the company’s manufacturing cycle time.
2. Compute the company’s manufacturing cycle efficiency.
3. Management believes it can reduce move time by 1.10 days and wait time by 2.50 days by adopting lean manufacturing techniques. Compute the company’s manufacturing cycle efficiency assuming the company’s predictions are correct.
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Investment Center Sales Income AverageInvested Assets Electronics $ 45,000,000 $ 3,420,000 $ 18,000,000 Sporting goods 25,200,000 2,520,000 14,000,000
Compute profit margin and investment turnover for each department. Which department generates the most net income per dollar of sales? Which department is most efficient at generating sales from average invested assets?
Profit Margin Choose Numerator: / Choose Denominator: = Profit Margin Investment Center / = Profit Margin Electronics / = 0 Sporting Goods / = 0 Which department generates the most net income per dollar of sales?
Explanation / Answer
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Investment Center Sales Income Average Invested Assets Electronics 45,000,000 3,420,000 18,000,000 Sporting goods 25,200,000 2,520,000 14,000,000 Profit Margin Choose Numerator: Choose Denominator: = Profit Margin Investment Center Net Income Sales = Profit Margin Electronics 3,420,000 45,000,000 = 7.60% Sporting Goods 2,520,000 25,200,000 = 10.00% So sporting goods most income per dollar of sale Investment Turnover Choose Numerator: Choose Denominator: = Investment Turnover Investment Center Sale Average Assets = Investment Turnover Electronics 45,000,000 18,000,000 = 2.5 Sporting Goods 25,200,000 14,000,000 = 1.8 So Electronics is most efficient in driving sale per dollar of investmentRelated Questions
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