Title: LaserLife Printer Cartridge Company is a decentralized organization with several autonomous division Post by: jerico on Mar 14, 2015 LaserLife Printer Cartridge Company is a decentralized organization with several autonomous divisions. The division managers are evaluated, in part, on the basis of the change in their return on invested assets. Operating results for the Packer Division for 2015 are budgeted as follows:
Sales $5,000,000 Less variable costs 2,500,000 Contribution margin 2,500,000 Less fixed expenses 1,800,000 Net operating income $ 700,000 Operating assets for the division are currently $3,600,000. For 2015, the division can add a new product line for an investment of $600,000. The new product line will generate sales of $1,600,000 and will incur fixed expenses of $600,000 annually. Variable costs of the new product will average 60% of the selling price. Required: a. What is the effect on ROI of accepting the new product line? b. If the company's required rate of return is 6% and residual income is used to evaluate managers, would this encourage the division to accept the new product line? Explain and show computations. Title: Re: LaserLife Printer Cartridge Company is a decentralized organization with several autonomous divi Post by: cyborg on Mar 15, 2015 Content hidden
Title: Re: LaserLife Printer Cartridge Company is a decentralized organization with several autonomous division Post by: jerico on Mar 23, 2015 Thank you for the help. I took this course as an elective, glad it's over in three weeks. Great textbook though!
Title: Re: LaserLife Printer Cartridge Company is a decentralized organization with several autonomous division Post by: cyborg on Mar 23, 2015 ;D
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