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Question 3(18 marks total) TatraTea Division of Herbal Products Ltd.is planning the operating budget for next year. Average total assets of $1,700,000 will be used
Question 3(18 marks total) TatraTea Division of Herbal Products Ltd.is planning the operating budget for next year. Average total assets of $1,700,000 will be used during the year and unit selling prices are expected to average $250 each. Variable costs of the division are budgeted at $600,000 while fixed costs are set at $450,000. The company's required rate of return is 10% Required 1) Compute the volume necessary to achieve a 15% ROI. (10 marks) The division manager receives a bonus of 50% of the residual income, what is his anticipated bonus for next year assuming he achieves the targeted operating income in part 1 and the required return is based on 10%? (18 marks) 2)
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