The Calculating Fashion Company Has Two Operating Divisions: North and South.The

question 21

Essay

The Calculating Fashion Company has two operating divisions: North and South.The following information was collected from its financial statements. $$\begin{array} { | l | r | r | } \hline & \text { North } & \text { South } \\\hline \text { Operating inc ome } & \$ 15,375 & \$ 9,160 \\\hline \text { Sales } & 90,100 & 128,445 \\\hline \text { Average operating assets } & 47,620 & 37,690 \\\hline\end{array}$$ Required:
The South Division has a goal to increase its ROI to 30% by the end of next year.Compute the increase (decrease)required in each of the following items in order to achieve this goal.a.Operating assets
b.Total costs
c.Sales

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Definitions:

Retail Price

The cost at which goods or services are sold to the public, typically higher than the wholesale price to include a markup for profit.

Manufacturer Markup

The difference between the cost to produce a good and its selling price, often added by manufacturers to cover costs and generate profit.

Exclusion of Markup

The practice of not including an additional amount to the cost of goods when pricing them, often to maintain competitive pricing.

Double Marginalization

A pricing issue that occurs when two or more entities in the same supply chain add their markup, leading to higher prices for the end consumer.