Craylon Corp

question 68

Essay

Craylon Corp.is planning the 2015 operating budget.Average operating assets of $1,800,000 will be used during the year and unit selling prices are expected to average $100 each.Variable costs of the division are budgeted at $500,000,while fixed costs are set at $300,000.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 2015,assuming he achieves the 20% ROI from part (a)?

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Definitions:

Acid

A chemical substance that donates protons or accepts electrons and has a sour taste.

Water

A ubiquitous chemical substance with the formula H2O, essential for all known forms of life and used as a solvent among its numerous roles.

Electrode

A conductor through which electricity enters or leaves an object, substance, or region, commonly used in batteries and electrolysis.

Voltage

The electrical potential difference between two points in a circuit, measured in volts.