The manager of the Dallas Division of Walking Tours of America is preparing the budget for 2021. At this point, she has determined that average total assets for 2021 will equal $4,000,000. She is evaluated on the amount of residual income generated by her division. Assume variable costs in Dallas Division are expected to equal 60% of total sales and fixed costs are expected to equal $400,000 in 2021. 1. Compute the sales level that would generate a 20% return on investment. 2. Assuming the rate of return is 15%, determine the level of sales that would generate $200,000 of residual income.
The manager of the Dallas Division of Walking Tours of America is preparing the budget for 2021. At this point, she has determined that average total assets for 2021 will equal $4,000,000. She is evaluated on the amount of residual income generated by her division. Assume variable costs in Dallas Division are expected to equal 60% of total sales and fixed costs are expected to equal $400,000 in 2021. 1. Compute the sales level that would generate a 20% return on investment. 2. Assuming the rate of return is 15%, determine the level of sales that would generate $200,000 of residual income.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 10CE: Coral Seas Jewelry Company makes and sells costume jewelry. For the coming year, Coral Seas expects...
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The manager of the Dallas Division of Walking Tours of America is preparing the budget for 2021. At this point, she has determined that average total assets for 2021 will equal $4,000,000. She is evaluated on the amount of residual income generated by her division. Assume variable costs in Dallas Division are expected to equal 60% of total sales and fixed costs are expected to equal $400,000 in 2021.
1. Compute the sales level that would generate a 20% return on investment.
2. Assuming the rate of return is 15%, determine the level of sales that would generate $200,000 of residual income.
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