During 2011, Company X sells 500,000 units for $8 each. Sales discounts are $100,000 and sales returns and allowances are $300,000.
The company reported a total of $710,000 in fixed assets on January 1, 2011 and $890,000 in fixed assets on December 31, 2011.
1. Calculate net sales revenue.
2. Calculate average fixed assets.
3. Calculate the fixed asset turnover ratio.
4. Assume the 2011 fixed asset turnover ratio was lower than the 2010 ratio. Describe one circumstance where this change would indicate bad news and one circumstance where this change would be consistent with good news.