The following information will be used for questions one and two.
1. The golf ball division of Titleist sells boxes of golf balls. The golf ball division has total fixed costs of $2,500,000 and average assets of $10,000,000. The average contribution margin per unit is $8.
If the division manager is evaluated based on the division's ROI, what is the minimum level of sales the division must achieve to provide a return of investment of 15%?
Select one:
a. 1,125,000 boxes
b. 562,500 boxes
c. 500,000 boxes
d. 187,500 boxes
2.In lieu of ROI, if the division manager is evaluated using residual income and cost of capital is assessed as 20%, what is the minimum level of sales the division must achieve to meet a positive residual income?
Select one:
a. 500,000 boxes
b. 562,000 boxes
c. 937,500 boxes
d. 1,500,000 boxes