ACC202 Co. makes bicycles and has only two products, the Tomado and the Racer. To manufacture...

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ACC202 Co. makes bicycles and has only two products, the Tomado and the Racer. To manufacture the Tomado, ACC202 employed assets of $2,150,000 at the beginning of the period and has $1,750,000 of assets at the end of the period. Other costs of manufacturing the Tomado include: Direct materials: $665 per unit; Set-up cost: $325 per set-up hour, Production: $182 per machine hour; In addition, general administration and selling costs total at $78,500 for the period. In the current period, ACC202 manufactured 6,300 Tornado bicycles using 665 set-up hours and 27,500 machine hours. ACC202 sold these bicycles for $1,550 each. Required: a) Assuming that ACC202 defines investment as average assets during the period, what is the return on investment (ROI) for the Tomado production line? b) Calculate the residual income (RI) for the Tornado line if ACC202 has a required rate of return of 11.5% on investments. c) The performance of the Tomado line's manager is evaluated on the basis of ROI. Describe some underlying issues in relation to measuring a manager's performance based on ROL ACC202 Co. makes bicycles and has only two products, the Tomado and the Racer. To manufacture the Tomado, ACC202 employed assets of $2,150,000 at the beginning of the period and has $1,750,000 of assets at the end of the period. Other costs of manufacturing the Tomado include: Direct materials: $665 per unit; Set-up cost: $325 per set-up hour, Production: $182 per machine hour; In addition, general administration and selling costs total at $78,500 for the period. In the current period, ACC202 manufactured 6,300 Tornado bicycles using 665 set-up hours and 27,500 machine hours. ACC202 sold these bicycles for $1,550 each. Required: a) Assuming that ACC202 defines investment as average assets during the period, what is the return on investment (ROI) for the Tomado production line? b) Calculate the residual income (RI) for the Tornado line if ACC202 has a required rate of return of 11.5% on investments. c) The performance of the Tomado line's manager is evaluated on the basis of ROI. Describe some underlying issues in relation to measuring a manager's performance based on ROL