Question
In: Accounting
The New Athletics Company produces a wide variety of outdoor sports equipment. Its newest division, Golf...
The New Athletics Company produces a wide variety of outdoor 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 New Athletics
Requirements
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1. |
Compute Golf Technology's ROI if the selling price of AccuDrivers is $640 per club. |
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2. |
If management requires an ROI of at least 30% from the division, what is the minimum selling price that the Golf Technology Division should charge per AccuDriver club? |
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Assume that New Athletics 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 $35,000,000 Variable cost per AccuDriver $400 Number of AccuDrivers sold each year 170,000 Average operating assets invested in the division $49,000,000 |
Solutions
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