Division Tooth of Blingy Company manufactures and sells premium toothbrush.

Production of toothbrush is assumed to be equivalent to sales. The following is the

budgeted data for the month of January $2022.$

Current assets $-$ $$400,000$

Long$-$term assets $-$ $$600,000$

Production output $-200,000$ toothbrush per month

Target Return on Investment $($ROI$)-30\%$

Fixed costs $-$ $$400,000$ per month

Variable costs $-$ $$4$ per toothbrush

You are required to:

a$.$ Compute the minimum selling price per toothbrush necessary to achieve the

target Return on Investment of $30\%.$

$(5$ marks$)$

b$.$ Compute the residual income $($RI$)$ of Division Tooth for January $2022$ using the

selling price acquired in $($a$).$ Blingy Company applies a required rate of return

of $12\%$ on total division of assets.

$(5$ marks$)$

c$.$ Dayang Sayang is the division manager of Division Tooth and has been working

with Blingy Co$.$ for five years. She has been awarded a special bonus for $3\%$ of

the monthly residual income of Division Tooth. Compute Dayang's total bonus

and show your workings.

$(2$ marks$)$

d$.$ 'Residual Income $($RI$)$ is not identical to Return on Investment $($ROI$)\text{'}$ although

both measures incorporate income and investments into their computations".

Do you agree?

$(5$ marks$)$