Question
ransfer take place? Briefly explain. Question 4 (20 marks) - Performance Measurement Francesca Company has current assets of $450,000 and capital assets of $630,000.
ransfer take place? Briefly explain. Question 4 (20 marks) - Performance Measurement Francesca Company has current assets of $450,000 and capital assets of $630,000. Its budgeted production volume for the next fiscal year 2023 is 200,000 units. Fixed costs are projected at $400,000 and variable unit costs for the one product produced total $5 per unit. The company defines Return on Investment (ROI) as Operating Income/Total Assets and its required rate of return is 14%. Required: a. What selling price should Francesca charge for its product if it wishes to achieve a 25% ROI? What is the operating income at this price? b. Camilla Lo, the operations manager for Francesca Company receives a bonus equal to 19% of the residual income (RI) for the period. Calculate the amount of the bonus assuming the selling price calculated in part a). C. Prepare a brief memo to Alex Singh, the President of Francesca Company outlining the advantages and disadvantages of ROI and Residual Income. What method would you recommend for calculating the bonus? Briefly explain your points.
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