Craylon Corp

Essay

Craylon Corp.is planning the 2015 operating budget.Average operating assets of $1,800,000 will be used during the year and unit selling prices are expected to average $100 each.Variable costs of the division are budgeted at $500,000,while fixed costs are set at $300,000.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 2015,assuming he achieves the 20% ROI from part (a)?