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Products from various companies are handled. The company runs its divisions as if they were independent operating units. The division managers have a great deal

Products from various companies are handled. The company runs its divisions as if they were independent operating units. The division managers have a great deal of leeway in terms of pricing and other decisions. Each division must achieve a return on investment of at least 10% on its operating assets. The leg division has average operating assets amounting to $500,000. Its legs sell for $10 per unit; their variable costs are $8 per unit. The division's fixed costs amount to $350,000 per period, and its production capacity is 300,000 legs annually. Going back to the initial data, assume that the normal sales volume is 230,000 legs per year at a price of $10 per unit. Another division of the company already buys 20,000 legs per year from a foreign supplier at $9 per unit. The manager of the leg division has categorically refused to sell his product at this price, arguing that it would result in losses for his division. The variable unit costs for legs are $8, and the fixed unit costs are $1.52. This would result in a loss of $0.52 per leg. The manager of the leg division also points out that the normal selling price of $10 allows his division to achieve the required 10% return on investment. "If we accept a contract at $9 per unit, our ROI will surely suffer! Moreover, my future depends on maintaining this ROI. In addition, the manufacture of these additional units would force us to increase our operating assets by at least $50,000 due to the inevitable increase in our inventory and accounts receivable."
A) What is the operating profit margin associated with the new sales (made internally) if the internal transfer is made at a price of $9?(Justify)(2)
a.9.4%
b.12.5%
c.11.1%
d.10.6%
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B) What is the asset turnover rate associated with the new sales (made internally) if the internal transfer is made at a price of $9?(Justify)(1)
a)3.6
b)2.3
c)1.7
d)5.2
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C) What is the return on invested capital associated with the new sales? (Justify)(1.5)
a)37.96%
b)39.96%
c)29.69%
d)11.11%
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D) What is the total operating profit margin of the company? (Justify)(1)
a)3.2%
b)8.2%
c)1.6%
d)4.5%
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E) What is the total asset turnover rate of the company? (Justify)(1)
a)

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