Essay
The Coffee Division of New Zealand Products is planning the 2019 operating budget.Average operating assets of $1 500 000 will be used during the year and unit selling prices are expected to average $100 each.Variable costs of the division are budgeted at $400 000,while fixed costs are set at $250 000.The company's required rate of return is 18%.
Required:
a.Compute the sales volume necessary to achieve a 20% ROI.
b.The division manager receives a bonus of 50% of residual income.What is his anticipated bonus for 2019,assuming he achieves the 20% ROI from part (a)?
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Correct Answer:
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a.Target operating profit = 0.20 × $1 50...View Answer
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