Arlene Clanston, General Manager of the Northwest Division of Blanton

question 40

Essay

Arlene Clanston, general manager of the Northwest Division of Blanton Enterprises, has significant authority over pricing decisions as well as programs that involve cost reduction/control. The data that follow relate to upcoming divisional operations:
Average invested capital: $15,000,000
Annual fixed costs: $3,900,000
Variable cost per unit: $80
Number of units expected to be sold: 120,000
Required:
A. Top management will promote Clanston if she can earn a 14% return on investment for the year. What unit selling price should she establish to get her promotion?
B. Independent of part "A," assume the unit selling price is $132 and that Blanton has a 16% imputed interest charge. Top management will promote Clanston to corporate headquarters if her division can generate $200,000 of residual income. If Clanston desires to move to corporate, what must the division do to the amount of annual fixed costs incurred? Show your calculations.

Factor expressions by factoring out common binomial or monomial factors.

Rewrite polynomials by factoring out negative real numbers.

Factor perfect square trinomials.

Understand the factorization of the difference of cubes.

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Definitions:

GDP

Gross Domestic Product, the total monetary value of all goods and services produced within a country's borders in a specific time period.

Technological Knowledge

The information and understanding related to the practical application of tools, machines, and techniques for solving problems and creating new products or processes.

Public Good

A product or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Education

The systematic process of facilitating learning, acquiring knowledge, skills, values, and beliefs through various means such as schooling, training, or research.