1.The manager of the Queen Division of Pusoy Company expects the following results in 2004 (pesos in millions).

SalesP49.60

Variable costs (60%)29.76

Contribution MarginP19.84

Fixed Costs12.00

ProfitP 7.84

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Investment:

Plant capitalP19.51

Working Capital14.88P34.39

ROI P7.84 / 34.3922.80%

The division has a target of 30%, and the manager has asked you to determine how much sales volume the division would need to reach that.He states the sales mix is relatively constant, so variable costs should be close to 60% of sales.Fixed cost and plant and equipment should remain constant, and working capital should vary closely with sales in the percentage reflected above.What would be the peso sales that the division needs in order to reach the 30% ROI target?

2.P Division makes and sells a single product.Presently it sells 12, 000 units per year to outside customers at P24 per unit.The annual capacity is 20,000 units and the variable cost to make each unit is P16.All selling expenses are fixed.L division would like to buy 10,000 units a year from P division.How much the minimum selling price that P division should charge L division?

3.B division of C company sells 80,000 units of parts Z to the outside market.Part Z sells for P10.00 and has a variable cost of P5.50 and a fixed cost per unit of P2.50.B has a capacity to produce 100,000 units per period.M division currently purchases 10,000 units of part Z from B division for P10.00.The M division has been approached by an outside supplier who is willing to supply the former part Z for P9.00. How much is the decrease of company's profit if M division accept the offer of outside supplier?

4.JW is the general manager of the Industrial Product Division, and his performance is measured using the residua income method.JW is reviewing the following forecasted information for his division for next year.

CategoryAmount(in thousands)

Working CapitalP1,800

Revenue30,000

Plant and equipment17,200

If the imputed charge is 15% and JW wants to achieve a residual income target of P2,000,000, what will costs have to be in order to achieve the target?

5.Listed below is selected financial information for W division of H Company for last year:

AccountAmount(Thousands)

Average working capitalP 725

General and administrative expenses75

Net sales4,000

Average plant and equipment1,775

Cost of goods sold3,525

H Company treats the W division as an investment center for performance measurement, what is the before tax return on investment (ROI) for last year?

6.The following information pertains to Q Company's Gold Division for the current year;

SalesP310,000

Variable cost250,000

Traceable fixed costs50,000

Average invested capital40,000

Imputed interest rate10%

Compute the Residual Income?