Question

Margin, Turnover, Return on Investment, Average Operating Assets

Nakamura Company provided the following income statement for the last year:

Line Item Description Amount
Sales $816,800,000
Less: Variable expenses 542,327,000
Contribution margin $274,473,000
Less: Fixed expenses 194,466,000
Operating income $80,007,000
At the beginning of last year, the company had $38,664,000 in operating assets. At the end of the year, the company had $41,343,000 in operating assets.

Required:

1. Compute average operating assets.
fill in the blank 1 of 1$

Answer 1

The average operating assets of Nakamura Company were calculated to be $40,003,500 for the last year.

Step-by-step explanation:

To compute the average operating assets, we take the sum of the operating assets at the beginning of the year and the operating assets at the end of the year, and divide by two. Based on the figures provided by Nakamura Company, the company had $38,664,000 in operating assets at the beginning and $41,343,000 at the end of the year.

Using the formula:

Average Operating Assets = (Beginning Operating Assets + Ending Operating Assets) / 2

The calculation is:

Average Operating Assets = ($38,664,000 + $41,343,000) / 2

Average Operating Assets = $80,007,000 / 2

Average Operating Assets = $40,003,500