The Coffee Division of American Products Is Planning the 20X5

question 76

Essay

The Coffee Division of American Products is planning the 20X5 operating budget. Average operating assets of $1,500,000 will be used during the year and unit selling prices are expected to average $100 each. 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 is 18%.
Required:
a. Compute the sales volume necessary to achieve a 20% ROI.
b. The division manager receives a bonus of 50% of residual income. What is his anticipated bonus for 20X5, assuming he achieves the 20% ROI from part (a)?

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Definitions:

Motivation Theories

A set of theories designed to understand, explain, and predict the forces that drive individuals to engage in particular behaviors.

Job Satisfaction

The level of contentment employees feel about their work, which can influence morale and performance.

Job Performance

The effectiveness and efficiency with which an employee fulfills their roles and responsibilities at work.

Job Rotation

A human resource strategy where employees are moved between different jobs or tasks to learn new skills, reduce boredom, and increase job satisfaction.