ROI and RI. (D. Kleespie, adapted) The Sports Equipment Company produces a wide variety of sports equipment. Its newest division, Golf Technology, manufactures and sells a single product— AccuDriver, a golf club that uses global positioning satellite technology to improve the accuracy of golfers’ shots. The demand for AccuDriver is relatively insensitive to price changes. The following data are available for Golf Technology, which is an investment center for Sports Equipment: Total annual fixed costsVariable cost per AccuDriverNumber of AccuDrivers sold each yearAverage operating assets invested in the division1. Compute Golf Technology's ROI if the selling price of AccuDrivers is $800 per club.S26,000,000600170,000$46,000,000Requiredthe Golf Technology Division should charge per AccuDriver club?3. Assume that Sports Equipment judges the performance of its investment centers on the basis of RIrather than ROI. What is the minimum selling price that Golf Technology should charge per AccuDriverif the company's required rate of return is 20%?

Return on investment (ROI) is an accounting measure that is used to determine the efficiency of the…

Answered: Total annual fixed costs Variable cost…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 4BE: Profit margin, investment turnover, and ROI Briggs Company has operating income of 36,000, invested...

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ROI and RI. (D. Kleespie, adapted) The Sports Equipment Company produces a wide variety of sports equipment. Its newest division, Golf Technology, manufactures and sells a single product— AccuDriver, a golf club that uses global positioning satellite technology to improve the accuracy of golfers’ shots. The demand for AccuDriver is relatively insensitive to price changes. The following data are available for Golf Technology, which is an investment center for Sports Equipment:

Total annual fixed costs
Variable cost per AccuDriver
Number of AccuDrivers sold each year
Average operating assets invested in the division
1. Compute Golf Technology's ROI if the selling price of AccuDrivers is $800 per club.
S26,000,000
600
170,000
$46,000,000
Required
the Golf Technology Division should charge per AccuDriver club?
3. Assume that Sports Equipment judges the performance of its investment centers on the basis of RI
rather than ROI. What is the minimum selling price that Golf Technology should charge per AccuDriver
if the company's required rate of return is 20%?

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