Question

Monfett Manufacturing earned operating income last year as shown in the following income

statement:
Sales $620,000
Cost of goods sold 316,000
Gross margin $304,000
Selling and administrative expense 219,000
Operating income $ 85,000
Less: Income taxes (at 40%) 34,000
Net income $ 51,000
At the beginning of the year, the value of operating assets was $263,000. At the end of the year, the value of operating assets was $336,000. Monfett Manufacturing requires a minimum rate of return of 15%. Total capital employed equal $350,000 and actual cost of capital is 6%.

Required:
Calculate the following:
1.Residual income
2.EV

Answer 1

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.