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1. The following data refers to the Daniels division of Tippett Inc. Daniels sells variablespeed drills. The standard drill sells for $.40) and Daniels plans sales of 30,000 nit in 2005Tippett treats ... Daniels as an investment center with total, attributable investment of 2800,000? Daniels' annual fixed costs are $ 200,000. Variable cost per standard drill is $24. Tire firm’srequired rate ofreturn on investment is<1 5%. The manager is evaluated based *—------------------------sepm—* • on ResidualIncome. Ne CCree Zcewo i 0.000 - {{zo Vo R oI = —-------------------- ———--------------- ------—----------Vafage Cpero* ASet 8°°O° 1. 1 What is the planned Return on Investment in 2005? 10,3— 1.2 A one-time external special order is received to buy from Daniel, 10,000 units of the standard drill at $30 each. If tire order is accepted, Daniels will have to incur additional annual fixed costs of $30,000. Based on the effect on Residual Income for tire first year, will the manager accept this order? 2-00,000 — ( 800,000 x045) - 1b°Oo° /—) Effect on RI for first year _+30.000 Will accept: Yes. or No 2 80,000 +30.000 • - ( 8co, Oco x0,14 ) - (Q0.000 30,000 » (300.000 - 20.000 - 30.006) 2. Cierra, Inc. manufactures computer chips. Currently, the costs per unit are as follows: [Show More]
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