Derek Daisy, majority stockholder and president of Daisy, Inc., is working with his top managers on future plans for the company. As the company's managerial accountant, you've been asked to analyze the following situations and make recommendations to the management team. Read the requirements. Requirement 1. Division A of Daisy, Inc. has $5,400,000 in assets. Its yearly fixed costs are $319,500, and the variable costs of its product line are $1.25 per unit. The division's volume is currently 470,000 units. Competitors offer a similar product, at the same quality, to retailers for $3.50 each. Daisy's management team wants to earn a 14% return on investment on the division's assets. 1a. What is Division A's target full product cost? Current fixed costs Current variable costs Desired profit Revenue at current market price Choose from any list or enter any number in the input fields and then click Check Answer. parts remaining Clear All Check Answer COMP26-1 (similar to) x Help i Requirements Requr s and make Derek Daisy, majority stockholder and president of Daisy, Inc., is working with his top managers on fu recommendations to the management team. Read the requirements. offer a Requirement 1. Division A of Daisy, Inc. has $5,400,000 in assets. Its yearly fixed costs are $319,500 similar product, at the same quality, to retailers for $3.50 each. Daisy's management team wants to ed 1a. What is Division A's target full product cost? Less: 1. Division A of Daisy, Inc. has $5,400,000 in assets. Its yearly fixed costs are $319,500, and the variable costs of its product line are $1.25 per unit. The division's volume is currently 470,000 units. Competitors offer a similar product, at the same quality, to retailers for $3.50 each. Daisy's management team wants to earn a 14% return on investment on the division's assets. a. What is Division A's target full product cost? b. Given the division's current costs, will Division A be able to achieve its target profit? c. Assume Division A has identified ways to cut its variable costs to $1.10 per unit. What is its new target fixed cost? Will this decrease in variable costs allow the division to achieve its target profit? Division A is considering an aggressive advertising campaign strategy to differentiate its product from its competitors. The division does not expect volume to be affected, but it hopes to gain more control over pricing. If Division A has to spend $80,000 next year to advertise and its variable costs continue to be $1.10 per unit, what will its cost-plus price be? Do you think Division A will be able to sell its product at the cost-plus price? Why or why not? 2. The division manager of Division B received the following operating income data for the past year: B Click the icon to view the Division B operating income data.) The manager of the division is surprised that the T205 product line is not profitable. The division accountant estimates that dropping the T205 product line will decrease fixed cost of goods sold by $84,000 and decrease fixed selling and administrative expenses by $8,000. a. Prepare a differential analysis to show whether Division B should drop the T205 product line. b. What is your recommendation to the manager of Division B? 2 Division calea nroduces two product lines Rocouco the division can call all of thonraduet it con Target full product cost Choose from any list or enter any number in the input fields and then click Check Answer. Print Done 22 parts Clear All Check Answer remaining TUULIOLO DULUI UJU, U TUUPLO COMP26-1 (similar to) X h Help A Requirements s and make Derek Daisy, majority stockholder and president of Daisy, Inc., is working with his top managers on fu recommendations to the management team. Read the requirements. offer a Requirement 1. Division A of Daisy, Inc. has $5,400,000 in assets. Its yearly fixed costs are $319,500 similar product, at the same quality, to retailers for $3.50 each. Daisy's management team wants to ed 1a. What is Division A's target full product cost? Less: w. vrat is your TCUOITTITIETTUALUIT W MIC Thanayci UI DIVISIUIT DE 3. Division C also produces two product lines. Because the division can sell all of the product it can produce, Daisy is expanding the plant and needs to decide which product line to emphasize. To make this decision, the division accountant assembled the following data: (Click the icon to view the Division C product data.) After expansion, the factory will have a production capacity of 4,800 machine hours per month. The plant can manufacture either 30 units of K707s or 65 units of G582s per machine hour. a. Identify the constraining factor for Division C. b. Prepare an analysis to show which product line to emphasize. 4. Division D is considering two possible expansion plans. Plan A would expand a current product line at a cost of $8,700,000. Expected annual net cash inflows are $1,600,000, with zero residual value at the end of 10 years. Under Plan B, Division D would begin producing a new product at a cost of $8,300,000. This plan is expected to generate net cash inflows of $1,090,000 per year for 10 years, the estimated useful life of the product line. Estimated residual value for Plan B is $1,200,000. Division D uses straight-line depreciation and requires an annual return of 10%. a. Compute the payback, the ARR, the NPV, and the profitability index for both plans. b. Compute the estimated IRR of Plan A. c. Use Excel to verify the NPV calculations in Requirement 4(a) and the actual IRR for the two plans. How does the IRR of each plan compare with the company's required rate of return? d. Division D must rank the plans and make a recommendation to Daisy's top management team for the best plan. Which expansion plan should Division D choose? Why? Target full product cost Choose from any list or enter any number in the input fields and then click Check Answer. Print Done Score: 0 of 100 pts 1 of 1 (0 complete) HW Score: 0%, 0 of 100 pts X * h Help - X | Help Data Table Requirements s and make MICUM LALEITICIIL For the Year Ended December 31, 2018 Product Line T205 B179 Total 300,000 $ 390,000 $ 690,000 vrat is your TCUOTTITIETTUALIOIT LU MC Malayti UI DIVISIOIT D Division C also produces two product lines. Because the division can sell all of the product it can roduce, Daisy is expanding the plant and needs to decide which product line to emphasize. To make his decision, the division accountant assembled the following data: (Click the icon to view the Division C product data.) onth. The plant A Data Table offer a Net Sales Revenue - X Cost of Goods Sold: Variable 33,000 230,000 42,000 66,000 75,000 296,000 Fixed 263,000 108,000 371,000 Per Unit oduct line at a Value at the of $8,300,000. e estimated puses K707 G582 37,000 282,000 Total Cost of Goods Sold Gross Profit Selling and Administrative Expenses: Variable 319,000 Sales price 58 90 $ 29 - 17 Variable costs 61 $ 41 Fixed 61,000 58,000 119,000 (82,000) $ 82,000 23,000 105,000 177,000 $ 143,000 81,000 224,000 95,000 Contribution margin Contribution margin ratio he two plans. Total Selling and Administrative Expenses 67.8% 70.7% ent team for $ (82,000) Operating Income (Loss) Print Done Print Done Done parts