The following information relates to the Smart Division of Mobile TeleCom Co.: ...80,000 units Budgeted Sales Selling price.... Variable cost per unit P 32.00 per unit P 20.00 per unit 600,000.00 P1,500,000.00 18 percent P Annual direct fixed cost, unavoidable Total divisional investment ... Minimum required rate of return

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required: Consider each part independently

1A. Determine the division’s expected ROI using Dupont formula. What is the division’s expected Residual Income?

1B. How many units must Smart sell to earn P100,000 Residual Income?

1C. The manager has the opportunity to sell additional 15,000 units at P29.50. Variable cost per unit would be the same but fixed cost would be increased by P50,000. An additional investment of P150,000 would be required. If the manager of Smart Division accepts the special order, by how much and in what direction will residual income change? increasing or decreasing direction?

Answer 1a to 1c with solution pls

 

The following information relates to the Smart Division of Mobile TeleCom Co.:
..80,000 units
Budgeted Sales
Selling price.
Variable cost per unit
Annual direct fixed cost, unavoidable
Total divisional investment ....
P 32.00 per unit
P 20.00 per unit
P 600,000.00
P1,500,000.00
18 percent
Minimum required rate of return
Transcribed Image Text:The following information relates to the Smart Division of Mobile TeleCom Co.: ..80,000 units Budgeted Sales Selling price. Variable cost per unit Annual direct fixed cost, unavoidable Total divisional investment .... P 32.00 per unit P 20.00 per unit P 600,000.00 P1,500,000.00 18 percent Minimum required rate of return
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