The Sports Equipment Company produces a wide variety of sports equipment. Its newest division, Golf Technology, manufactures and sells a single product— AccuDriver, a golf club that uses global positioning satellite technology to improve the accuracy of golfers’ shots. The demand for AccuDriver is relatively insensitive to price changes. The following data are available for Golf Technology, which is an investment center for Sports Equipment: Total annual fixed costs $26,000,000 Variable cost per AccuDriver $ 600 Number of AccuDrivers sold each year 170,000 Average operating assets invested in the division $46,000,000 Q.Assume that Sports Equipment judges the performance of its investment centers on the basis of RI rather than ROI. What is the minimum selling price that Golf Technology should charge per AccuDriver if the company’s required rate of return is 20%?
The Sports Equipment Company produces a wide variety of sports equipment. Its newest division, Golf Technology, manufactures and sells a single product— AccuDriver, a golf club that uses global positioning satellite technology to improve the accuracy of golfers’ shots. The demand for AccuDriver is relatively insensitive to price changes. The following data are available for Golf Technology, which is an investment center for Sports Equipment:
Total annual fixed costs $26,000,000
Variable cost per AccuDriver $ 600
Number of AccuDrivers sold each year 170,000
Average operating assets invested in the division $46,000,000
Q.Assume that Sports Equipment judges the performance of its investment centers on the basis of RI rather than
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