Total annual fixed costs Variable cost per AccuDriver Number of AccuDrivers sold each year Average operating assets invested in the division 1. Compute Golf Technology's ROI if the selling price of AccuDrivers is $800 per club. S26,000,000 600 170,000 $46,000,000 Required the Golf Technology Division should charge per AccuDriver club? 3. 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%?
Total annual fixed costs Variable cost per AccuDriver Number of AccuDrivers sold each year Average operating assets invested in the division 1. Compute Golf Technology's ROI if the selling price of AccuDrivers is $800 per club. S26,000,000 600 170,000 $46,000,000 Required the Golf Technology Division should charge per AccuDriver club? 3. 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%?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
ROI and RI. (D. Kleespie, adapted) 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:
Transcribed Image Text:Total annual fixed costs
Variable cost per AccuDriver
Number of AccuDrivers sold each year
Average operating assets invested in the division
1. Compute Golf Technology's ROI if the selling price of AccuDrivers is $800 per club.
S26,000,000
600
170,000
$46,000,000
Required
the Golf Technology Division should charge per AccuDriver club?
3. 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%?
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