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Doug Davidson, majority stockholder and president of Davidson, Inc., is working with his top managers on future plans for the company. As the company's
Doug Davidson, majority stockholder and president of Davidson, 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 Davidson, Inc. has $5,300,000 in assets. Its yearly fixed costs are $772,500, and the variable costs of its product line are $1.90 per unit. The division's volume is currently 550,000 units. Competitors offer a similar product, at the same quality, to retailers for $4.25 each. Davidson's management team wants to earn a 10% return on investment on the division's assets. 1a. What is Division A's target full product cost? Less: Target full product cost
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