Management of Herbert, Inc., set an objective of a 20 percent return on assets employed by all segments. The XRX product line employed assets totaling $800,000, while $75,000 fixed costs relate directly to this product line. Variable costs amount to $4 per unit.

Required:

a. Determine breakeven sales in units for this division if the sales price is $9 per unit.

b. Compute how many units must be sold at the $9 sales price to earn the desired rate of return.

c. Calculate the segment’s residual income assuming an interest rate of 12 percent if 50,000 units are sold at a $10 unit sales price.

d. Compute the rate of return earned if 20,000 units were sold at a $12 sales price.