ACCOUNTING
Evergreen Industries operates a chain of lumber stores. In 2010, corporate management examined industry-level data and determined the following performance targets for lumber retail stores:
Asset turnover 1.9
Profit margin 7.0%
The actual 2010 results for the company’s lumber retail stores are as follows:
Total assets at the beginning of year $10,200,000
Total assets at end of year 12,300,000
Sales 28,250,000
Operating expenses 25,885,000
a. For 2010, how did the lumber retail stores perform relative to their industry norms?
b. Which, as indicated by the performance measures, are the most likely areas to improve performance in the retail lumber stores?
c. What are the advantages and disadvantages of setting a performance target at the start of the year compared with one that is determined at the end of the year based on actual industry performance?
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