44 The peso sales that the division needs in order to reach the 30% ROI target is *Sample format: 11,111,111The manager of the generator Division of NUBD Co. expects the following results in2021 (in millions):SalesVariable costs (60%)|Contribution marginFixed costsProfitP49.6029.7619.8412.00PZ.84Plant equipmentWorking capitalInvestmentP19.5114.88P34.39RỒI (7.84/34.29)22.80%The division has a target ROI of 30%. He states that the sales mix is relativelyconstant so variable costs and equipment should be close to 60% of sales, fixed costand plant and equipment should remain constant, and working capital (cash,receivables and inventories) should vary closely with sales at a rate of 30%.

Contribution margin for sale mix=Sale %-Variable cost %=100-60=40% or 0.40

The peso sales that the division needs in order to reach the 30% ROI target is * Sample format: 11,111,111 The manager of the generator Division of NUBD Co. expects the following results in 2021 (in millions): Sales Variable costs (60%) Contribution margin Fixed costs Profit P49.60 29 76 19.84 12.00 P7.84 Plant equipment Working capital Investment P19.51 14.88 P34.39 ROI (7.84/34.29) 22.80% The division has a target ROI of 30%. He states that the sales mix is relatively constant so variable costs and equipment should be close to 60% of sales, fixed cos and plant and equipment should remain constant, and working capital (cash, receivables and inventories) should vary closely with sales at a rate of 30%.

The peso sales that the division needs in order to reach the 30% ROI target is * Sample format: 11,111,111 The manager of the generator Division of NUBD Co. expects the following results in 2021 (in millions): Sales Variable costs (60%) Contribution margin Fixed costs Profit P49.60 29 76 19.84 12.00 P7.84 Plant equipment Working capital Investment P19.51 14.88 P34.39 ROI (7.84/34.29) 22.80% The division has a target ROI of 30%. He states that the sales mix is relatively constant so variable costs and equipment should be close to 60% of sales, fixed cos and plant and equipment should remain constant, and working capital (cash, receivables and inventories) should vary closely with sales at a rate of 30%.

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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