Reference no: EM132736977
Questions -
Q1. The manager of the Queen Division of Pusoy Company expects the following results in 2004 (pesos in millions).
Sales P49.60
Variable costs (60%) 29.76
Contribution Margin P19.84
Fixed Costs 12.00
Profit P 7.84
Investment:
Plant capital P19.51
Working Capital 14.88 P34.39
ROI P7.84 / 34.39 22.80%
The division has a target of 30%, and the manager has asked you to determine how much sales volume the division would need to reach that. He states 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 should vary closely with sales in the percentage reflected above. What would be the peso sales that the division needs in order to reach the 30% ROI target?
Q2. P Division makes and sells a single product. Presently it sells 12, 000 units per year to outside customers at P24 per unit. The annual capacity is 20,000 units and the variable cost to make each unit is P16. All selling expenses are fixed. L division would like to buy 10,000 units a year from P division. How much the minimum selling price that P division should charge L division?
Q3. B division of C company sells 80,000 units of parts Z to the outside market. Part Z sells for P10.00 and has a variable cost of P5.50 and a fixed cost per unit of P2.50. B has a capacity to produce 100,000 units per period. M division currently purchases 10,000 units of part Z from B division for P10.00. The M division has been approached by an outside supplier who is willing to supply the former part Z for P9.00. How much is the decrease of company's profit if M division accept the offer of outside supplier?
Q4. JW is the general manager of the Industrial Product Division, and his performance is measured using the residua income method. JW is reviewing the following forecasted information for his division for next year.
Category Amount (in thousands)
Working Capital P1,800
Revenue 30,000
Plant and equipment 17,200
If the imputed charge is 15% and JW wants to achieve a residual income target of P2,000,000, what will costs have to be in order to achieve the target?
Q5. Listed below is selected financial information for W division of H Company for last year:
Account Amount (Thousands)
Average working capital P 725
General and administrative expenses 75
Net sales 4,000
Average plant and equipment 1,775
Cost of goods sold 3,525
H Company treats the W division as an investment center for performance measurement, what is the before tax return on investment (ROI) for last year?
Q6. The following information pertains to Q Company's Gold Division for the current year;
Sales P310,000
Variable cost 250,000
Traceable fixed costs 50,000
Average invested capital 40,000
Imputed interest rate 10%
Compute the Residual Income?