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ROI, RI, decision making. The following data refer to the successful Munger division of Buffett, Inc. Munger makes and sells high-end cordless drills. The drills sell for $80 each, and Munger expects sales of 300,000 units in 2014. Munger’s annual fixed costs are $4 million. The variable cost per drill is $48. Buffett evaluates Munger based on residual income. The total investment attributed to Munger is $16 million, and Buffett has a required rate of return on investment of 20%. Ignore taxes and depreciation expense. Answer each of the following parts independently, unless otherwise stated.1. What is the expected residual income in 2014?2. Munger receives an external special order for 100,000 units at $60 each. If the order is accepted,Munger will have to incur incremental fixed costs of $850,000 and invest an additional $2 million in various assets.What is the effect on Munger’s residual income of accepting the order?3. One of the components Munger manufactures for its drill has a…

Brahma Industries sells vinyl replacement windows to home improvement retailers nationwide. The national sales manager believes that if they invest an additional $25,000 in advertising, they would increase sales volume by 10,000 units. Prepare a forecasted contribution margin income statement for Brahma if they incur the additional advertising costs, using this information:

(a) Kimberley-Clark makes luxury hampers for sale in a chain of high-class department stores. The following financial information is available in Table Q2. Current output and sales are set at 30,000 hampers per year, though the fim has the capacity to produce 50,000 hampers per year. Table 2 COST ELEMENT PRICE (RM) 1. Wholesale price 2. Labor and material costs 3. Bought-in components 4. Overheads 80 15 25 800,000 (i) Identify and calculate the fixed cost. (11) Identify and calculate the variable cost. (111) Calculate the break-even quantity for the firm. (iv) Calculate the level of profit the firm is making.

Titan Metalworks produces a special kind of metal ingots that are unique, which allows Titan to follow a cost-plus pricing strategy. Titan has $10,000,000 of assets and shareholders expect approximately a 7% return on assets. Assume all products produced are sold. Additional data are as follows: units per year per unit per year Using the cost-plus pricing approach, what should be the sales price per unit? (Round your answer to the nearest cent.) Sales volume Variable costs Fixed costs 400,000 $16 $1,500,000 A. $16.00 OB. $21.50 OC. $1.75 OD. $19.75 (...)

[The following information applies to the questions displayed below.] Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics: Sales price Variable costs Fixed costs $ 12.00 per case 5.50 per case 391,950 per year Assume that the company plans to sell 75,300 units annually. Consider requirements (b), (c), and (d) independently of each other. Required: a. What will be the operating profit? b. What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? Note: Do not round intermediate calculations. c. What is the impact on operating profit if variable costs per unit decrease by 20 percent? Increase by 10 percent? Note: Do not round intermediate calculations. d. Suppose that fixed costs for the year are 20 percent lower than projected and variable costs per unit are 20 percent higher tha projected. What impact will these cost changes have on operating profit for the year? Will profit…

Cosmic Cosmetics (CC) has capacity to produce and sell 200,000 units per month. Costs at this level are provided in the table below. CC currently sells 175,000 units per month, at $1.55 per unit. Pur Skinn has contacted CC about purchasing 15,000 units at $1.05 each. Current sales would not be affected by the special order, and variable marketing costs would not be incurred on the special order. What is CCs' change in net income if the order is accepted? a. $9,375 increase b. $9,375 decrease c. $5,625 increase d. $5,625 decrease Per Unit Costs: Prime Costs Variable manufacturing overhead Variable marketing Total Costs: Fixed manufacturing overhead Fixed marketing $0.350 0.075 0.250 $20,000 $24,000

Pharoah Industries produces and sells electronic sound equipment. The company has production capacity of 20600 units and currently production schedule is for 18600 units. Each unit has a selling price of $25, variable product cost of $15, and variable selling cost of $2. Another division wishes to purchase 560 units. If Pharoah sells the units to the other division, it will avoid $1 of the variable selling costs. What is the minimum transfer price that will maximize corporate profits? $25 $15 $17 $16

Divine Electronics Ltd. manufactures a line of headphones. Sales are increasing, and management is concerned that the company may not have sufficient capacity to meet the expected demand for the coming  year. The following data are available for planning purposes:   Product Estimated Demand Next Year Selling Price Direct Materials Direct Labour   1 Wire 78,000 $25.00 $7.30 $5.00   2 Wire 75,000 20.00 10.20 3.20   3 Wire 115,000 17.50 2.80 5.00             The following additional information is available: 1. With the strong competition, the company feels that it can't increase its selling prices above those indicated 2. The direct labour rate is $10 per hour; this rate is expected to remain unchanged during the coming year. 3. Fixed manufacturing costs total $640,000 per year.  Variable manufacturing overhead costs are equal to 25% of the direct labour costs. 4. The company's plant has a capacity of 110,000 direct labour-hours per…