Consider the following data regarding budgeted operations for 20X7 of the Chicago division of Industrial Products: Average total assets Receivables $270,000 Inventories 410,000 Plant and equipment, net 320,000 Total $1,000,000 Fixed overhead $250,000 Variable costs $1.50 per unit Desired rate of return on average total assets 20% Expected volume 300,000units (Assume that the company defines invested capital as total assets.) Requirements: 1. a.What average unit sales price does the Chicago division need to obtain its desired rate of return on average total assets? b.What would be the expected capital turnover? c.What would be the return on sales? 2. a.If the selling price is as previously computed, what rate of return will the division earn on total assets if sales volume is 315,000 units? b.If sales volume is 260,000 units? 3. Assume that the Chicago division plans to sell 100,000 units to the Fort Worth division of Industrial Products and that it can sell only 200,000 units to outside customers at the price computed in requirement 1a. The Fort Worth division manager has balked at a tentative transfer price of $2.30. She has offered $ 1.80, claiming that she can manufacture the units herself for that price. The Chicago division manager has examined his own data. He had decided that he could eliminate $75,000 of inventories, $160,000 of plant and equipment, and $40,000 of fixed overhead if he did not sell to the Fort Worth division and sold only 200,000 units to outside customers. Should the Chicago division manager sell for $1.80? Show computations to support your answer.