Requirements b. What is your recommendation so the manaper of Divisien is? Kre7n or ss unts of GSbas per machine hove. a. Isently the constraing tactoe for bivien C. b. Prebare an analysis to show which produst ine is emphater return diox b. Conovis the estmaded IRR ot Plan A. Requirements 1. Division A of Durant, Inc. has $4,900,000 in assets. Its yearly fixed costs are $820,500, and the variable costs of its product line are $1.25 per unit. The division's volume is currently 490,000 units. Competitors offer a similar product, at the same quality, to retailers for $3.50 each. Durant's management team wants to earn a 6% retum on investment on the division's assots. Requireme a. What is Division A's target full product cost? b. Given the division's current costs, will Division A be able to achiove 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? d. 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 $145,000 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 8 received the following operating income data for the past year: Requirements 2. The divacen manager of Dovisich 8 receved the following oporaking income data for the past year Division B of Durant, lne. income statensent For the Year Ended December 31,2024 Requirements 1. Dision K of Durant, inc has $4,900,000 in assets. its yearfy fixed costs are $820,500, and the variable costs of ats product line are $1.25. per unt. The dvision's volume is curtently 490,000 units. Competiters ofler a similar product, at the same qually, to retalers for $3.50 each. Durants management learn wants to eam a 6% tetum on investment on the division's assets a. What is Division Ay takget ful peoduct coar? b. Given the division's current costs, wit Division A be able to achive its target profir? c. Asume Division A has identfied ways to cut is vartable costs to $1.10 por unit. What is its new target foved cost? Wil this decrease in variabie costs allow the division to achieve is target profit? d. Divsion A is considering an aggressive advertising campaign strategy to diflerentioto its pcoduct from its compotions. The civision dees not expect volume to be affectod, but it hopes to gain more control over pricing. If Divion A has to spend $145,000 next year to advertise and its variable costs continue to be $1.10 per unit, what wal its cost-plus price be? Do you think Divisicn 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 ope \& ting income daca for the past year: a. Identy the constraing tactor for Division C b. Prepacn an analysis to show which product ine to emphaside. net cash irflows are \$1,550, 000, wth sero residus value at the end of 10 years. Under Plan B; Divion D would begin producing a new rehin al to\%. a Compute the payback, the ARR, the NPV, and the proficality inclex lor both plans. b. Compute the estmated irit of Pain A. compare with the consary's required eale of rehum? d. Division 0 mist rank the plans and make a recomunondobon to Duracrs bo management leam for the best pian, Which expansion plan shoved Orision Dethoose? Why? K Road the cocirroments Less. Tarpot the product coses Requirements b. What is your recommendation so the manaper of Divisien is? Kre7n or ss unts of GSbas per machine hove. a. Isently the constraing tactoe for bivien C. b. Prebare an analysis to show which produst ine is emphater return diox b. Conovis the estmaded IRR ot Plan A. Requirements 1. Division A of Durant, Inc. has $4,900,000 in assets. Its yearly fixed costs are $820,500, and the variable costs of its product line are $1.25 per unit. The division's volume is currently 490,000 units. Competitors offer a similar product, at the same quality, to retailers for $3.50 each. Durant's management team wants to earn a 6% retum on investment on the division's assots. Requireme a. What is Division A's target full product cost? b. Given the division's current costs, will Division A be able to achiove 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? d. 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 $145,000 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 8 received the following operating income data for the past year: Requirements 2. The divacen manager of Dovisich 8 receved the following oporaking income data for the past year Division B of Durant, lne. income statensent For the Year Ended December 31,2024 Requirements 1. Dision K of Durant, inc has $4,900,000 in assets. its yearfy fixed costs are $820,500, and the variable costs of ats product line are $1.25. per unt. The dvision's volume is curtently 490,000 units. Competiters ofler a similar product, at the same qually, to retalers for $3.50 each. Durants management learn wants to eam a 6% tetum on investment on the division's assets a. What is Division Ay takget ful peoduct coar? b. Given the division's current costs, wit Division A be able to achive its target profir? c. Asume Division A has identfied ways to cut is vartable costs to $1.10 por unit. What is its new target foved cost? Wil this decrease in variabie costs allow the division to achieve is target profit? d. Divsion A is considering an aggressive advertising campaign strategy to diflerentioto its pcoduct from its compotions. The civision dees not expect volume to be affectod, but it hopes to gain more control over pricing. If Divion A has to spend $145,000 next year to advertise and its variable costs continue to be $1.10 per unit, what wal its cost-plus price be? Do you think Divisicn 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 ope \& ting income daca for the past year: a. Identy the constraing tactor for Division C b. Prepacn an analysis to show which product ine to emphaside. net cash irflows are \$1,550, 000, wth sero residus value at the end of 10 years. Under Plan B; Divion D would begin producing a new rehin al to\%. a Compute the payback, the ARR, the NPV, and the proficality inclex lor both plans. b. Compute the estmated irit of Pain A. compare with the consary's required eale of rehum? d. Division 0 mist rank the plans and make a recomunondobon to Duracrs bo management leam for the best pian, Which expansion plan shoved Orision Dethoose? Why? K Road the cocirroments Less. Tarpot the product coses
