What would be the peso sales that the division needs

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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%

Problem 1: 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?

Reference no: EM132781075

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