The Division a of Standard Products Is Planning Its 2019

question 58

Essay

The Division A of Standard Products is planning its 2019 operating budget. Average operating assets of $1,500,000 will be used during in the division during the year and per-unit selling prices are expected to average $100. Variable costs of the division are budgeted at $400,000, while fixed costs are set at $250,000. The company's required rate of return for purposes of calculating residual income (RI) is 18%.

Required:
1. Compute the sales volume (in units) necessary for Division A to achieve a 20% ROI in 2019.
2. The division manager receives a bonus of 50% of residual income (RI). What is her anticipated bonus for 2019 for the division manager, assuming she achieves the 20% ROI target specified in part (1)?

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Definitions:

Effectiveness

Effectiveness refers to the degree to which a method, process, or activity achieves its intended outcome or result.

Fully Functioning

A term used in humanistic psychology to describe an individual who is living in alignment with their true self and potential.

Real Selves

The authentic version of an individual, embodying their true thoughts, feelings, and desires.

Ideal Selves

Represents an individual's conception of how they would like to be, encompassing aspirations, goals, and the standards one aims to achieve.