The manager of the Apple Division of Mobile Company expects the following results in 2016 (pesos in millions): Sales 49,600,000 Variable Costs 29,760,000 Contribution Margin 19,840,000 Fixed Costs 12,000,000 Profit 7,840,000 Investment: Plant Equipment 19,510,000 Working Capital 14,880,000 34,390,000 Present ROI (7,840,000/34,390,000) 22.80% The division has a target ROI of 30%, and the manager has asked you to determine how much sales volume the division would need to reach that. He states that the sales mix is relatively constant so variable costs should be close to 60% of sales, fixed cost and plant and equipment should remain constant, and working capital (cash, receivables, and inventories) should vary closely with sales in the percentage reflected above. The peso sales that the division needs to reach in order to reach the 30% target ROI
The manager of the Apple Division of Mobile Company expects the following results in 2016 (pesos in millions):
|
Sales |
49,600,000 |
|
|
Variable Costs |
29,760,000 |
|
|
Contribution Margin |
19,840,000 |
|
|
Fixed Costs |
12,000,000 |
|
|
Profit |
7,840,000 |
|
|
Investment: |
||
|
Plant Equipment |
19,510,000 |
|
|
|
14,880,000 |
34,390,000 |
|
Present |
22.80% |
The division has a target ROI of 30%, and the manager has asked you to determine how much sales volume the division would need to reach that. He states that the sales mix is relatively constant so variable costs should be close to 60% of sales, fixed cost and plant and equipment should remain constant, and working capital (cash, receivables, and inventories) should vary closely with sales in the percentage reflected above. The peso sales that the division needs to reach in order to reach the 30% target ROI
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