The Coffee Division of American Products is planning the 20X5 operating budget. Average operating assets of $1,500,000 will be used during the year and unit selling prices are expected to average $100 each. Variable costs of the division are budgeted at $400,000, while fixed costs are set at $250,000. The company's required rate of return is 18%.
Required:
a. Compute the sales volume necessary to achieve a 20% ROI.
b. The division manager receives a bonus of 50% of residual income. What is his anticipated bonus for 20X5, assuming he achieves the 20% ROI from part (a)?

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The Answer of The Coffee Division of American Products is planning the 20X5 operating budget. Average operating assets of $1,500,000 will be used during the year and unit selling prices are expected to average $100 each. Variable costs of the division are budgeted at $400,000, while fixed costs are set at $250,000. The company's required rate of return is 18%.
Required:
a. Compute the sales volume necessary to achieve a 20% ROI.
b. The division manager receives a bonus of 50% of residual income. What is his anticipated bonus for 20X5, assuming he achieves the 20% ROI from part (a)?

The Coffee Division of American Products Is Planning the 20X5