Performance of investment centers, Accounting Basics

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Performance of investment centers

The Outdoor Sports Company produces a wide variety of outdoor 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 Outdoor Sports:

Total annual fixed costs $30,000,000
Variable cost per AccuDriver $ 500
Number of AccuDrivers sold each year 150,000
Average operating assets invested in the division $48,000,000

1. Compute Golf Technology's ROI if the selling price of AccuDrivers is $720 per club. Required

2. If management requires an ROI of at least 25% from the division, what is the minimum selling price that the Golf Technology Division should charge per AccuDriver club?

3. Assume that Outdoor Sports 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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Accounting Basics: Performance of investment centers

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Accounting Basics: Performance of investment centers

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Recent Questions Asked Accounting Basics

Q : Storage of excess inventory

Q : Business decision of the company

Q : Determining the six-month spot rate

Q : Find independent variables which correlated with each other

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Ask an Expert for Answer!!

Accounting Basics: Performance of investment centers

Reference No:- TGS046490

Recent Questions Asked Accounting Basics

Q : Storage of excess inventory

Q : Business decision of the company

Q : Determining the six-month spot rate

Q : Find independent variables which correlated with each other

Q : Performance of investment centers

Q : Prepare form 1040 and all related schedules, forms

Q : Net working capital resulting from addition of microbrewery

Q : Why is mtv so profitable relative to major networks

Q : Compute amount of gain to be reported currently on the sale

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