Question
Bravo Luxury Company manufactures yachts and has two products: the Motor Yacht and the Sailing Yacht. Each Motor Yacht sells for $12,000,000, while the Sailing
Bravo Luxury Company manufactures yachts and has two products: the Motor Yacht and the Sailing Yacht. Each Motor Yacht sells for $12,000,000, while the Sailing Yachts are only $10,000,000 each. To produce their Motor Yachts, Bravo employed assets of $2.80 billion at the beginning of 2022 and $2.15 billion of assets at the end of 2022. Other costs to manufacture the Motor Yachts include the following:
Direct Materials | $5,000,000 per unit |
Setup | $10,500 per setup-hour |
Production | $400 per machine-hour |
SG&A for the company was $18,000,000 in total during 2022, of which 70% was related to their Motor Yachts. During the year, Bravo produced 100 Motor Yachts. Each Motor Yacht requires 30 setup hours and 1,500 machine hours.
Assuming Bravo defines investment as average assets during the period, what is the return on investment (ROI) for the Motor Yacht division? (round to the third decimal point, e.g., 0.102 or 0.758)
***CORRECT ANSWER IS .241, PLEASE EXPLAIN HOW STEP BY STEP***
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