Beginning inventory, purchases, and sales data for tennis rackets are as follows 11 units @ 7 units @ 16 units 21 units @ 10 units Inventory Purchase Sale Purchase Sale r. $16.00 $21.00 14 21 25 $25.00 Assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using LIFO Select the correct answer cost of merchandise sold $541.00 and ending inventory $307.00 cost of merchandise sold $541.00 and ending inventory $432.00 cost of merchandise sold $416.00 and ending inventory $432.00 cost of merchandise sold $541.00 and ending inventory $650.00 Solution Cost of goods sold of Apr. 14 Sale: (7 units x $21) + (9units x $16) = $147 + $144 = $291 Cost of goods sold of Apr. 25 Sale: 10 units x $25 = $250 Total cost of goods sold = $291 + $250 = $541. Ending Inventory: Apr. 3 Inventory - 2 units @ $16 = $32 Apr. 21 Purchases - 11 units @ $25 = $275 Total Ending Inventory = $307 Therefore, Cost of merchandise sold $541 and ending inventory is $307 Option A is correct answer..

1. C O ezto.mheducation.com/hm.tpx?-0.3823411423426243 1530809771530 Problem 11-20
Return on Investment (ROI) Analysis LO11-1 The contribution format income statement for
Huerra Company for last year is given below Total Sales Variable expenses $1,002,000 $50.10
601,200 30.06 Contribution margin Fixed expenses 400,800 20.04 318,800 15.94 Net operating
income Income taxes @ 40% 82,000 4.10 32,800 1.64 Net income $ 49,200 2.46 The company
had average operating assets of $505,000 during the year Required 1. Compute the company's
return on investment (ROI) for the period using the ROI formula stated in terms of margin and
turnover. (Round your intermediate calculations and final answer to 2 decimal places.) Margin
Turnover RO For each of the following questions, indicate whether the margin and turmover will
increase, decrease, or remain unchanged as a result of the events described, and then compute the
new ROl figure Consider each question separately, starting in each case from the data used to
compute the original ROl in (1) above 2 Using Lean Production, the company is able to reduce
the average level of inventory by $92,000 (The Type here to searc
Solution
1. Calculation of Return on Investment.(ROI)
ROI = Margin * Turnover
Margin = Net Operating Income/Sales = $82,000/$1,002,000 = 0.081836 or 8.2%
Turnover = Sales/Average Operating Assets = $1,002,000/$505,000 = 1.984158
ROI = 8.2% * 1.98 = 16.27%
2. Decrease in average inventory level, will decrease Operating Assets by same amount.
Current Operating Assets = Operating Assets - Decrease in Inventory
Current Operating Assets = $505,000 - $92,000 = $413,000
Margin = Net Operating Income/Sales = $92,000/$1002,000 = 0.091816 = 9.2%
Turnover = Sales/Average Operating Assets = $1002,000/$413,000 = 2.42615
ROI = 9.2% * 2.42615 = 22.32058
3. Cost Savings will increase the net operating incocme.
Current Operating Income = Net Operating Income + Cost Savings = $92,000+$13,000 =
$105,000
Margin = $105,000/1002,000 = 0.10479 or 10.48%
Turnover = Sales/Average Operatingg Assets = $1002,000/$505,000 = 1.984158
ROI = 10.48% * 1.98 = 20.79 %
4. Purchasing new equipment increase the operating assets
When Production Cost is reduced, it increases the net operating income.
Operating Assets = Operating Assets + Machinery and Equipment = $505,000 + $127,000 =

2. $632,000
Net Operating Income = Net Operating Income + Decrease in production cost = $92,000+$6,000
= $98,000
Margin = $98,000/$1,002,000 = 0.097804 = 9.78%
Turnover = $1002000/$632,000 = 1.585443
ROI = 9.78% * 1.585 = 15.51%