Big and Little are both divisions in a large, multinational corporation Although each division operates independently, both make and market the same products: a line of handcrafted kaleidoscopes. The specifications for the products are provided at the corporate level, but modifications based on local demand, supply chains, etc are allowed. Clearly, product mix differs between the two divisions. Little is located in Cancun, Mexico. It is able to access reasonably priced labour and abundant natural resources. Its primary market is the huge tourist industry in Cancun and the surrounding area. Big is located in Moscow, Russia. Labour rates and benefits are strictly regulated. Natural resources as well as manufactured goods (glass, steel, plastic, etc.) are readily available. The primary market is local individuals and stores, although there is a growing tourist industry.

Selected information for the most recent month for Big and Little follows:

Division	Big	Little
Average selling price	$42	$45
Units produced	86,000	38,600
Units sold	85,000	35,400
Average unit cost (variable costing)	$31	$28
Average unit cost (absorption costing)	$36	$37
Break even point (in units)	10,125	6,320
DOL	2.45	2.77
NI	$423,400	$185,300

Corporate management has decided to implement a new bonus plan for divisional managers. The bonus will be 50% of current salary. There are two targets which must be met in order to quality for the bonus: an increase in net income of 15% or more and a reduction in unit cost of 10% or more. Choose the division that you think is most likely to be able to meet the targets. Explain why. Make specific recommendations about what the manager should do in order to achieve the bonus.