Requirement 4: KMB Technology special order Assume your division chose to introduce routers in FYX2 (as described in Requirement 3). You have been approached by a new customer, KMB Technology, to fulfill a one-time special order for a modified version of your division's router that would require special materials and a modified production process. KMB wants to purchase 10,000 units of this special router at $150 per unit. Your division has enough excess capacity to produce the modified router for KMB without interfering with existing business. The materials required for this special order will cost 20% more than materials for the standard router and a new machine that costs 3210,000 will be required. Otherwise, all manufacturing costs would be the same as the costs to produce routers for regular customers (as described in Requirement 3). Aggume the new machine required for this special order has no alternate uses and no salvage value. No sales commissions would be paid on this special ord w Your first reaction to this special order is negative because KMB wants to pay significantly less than the $300 selling price regular customers pay for standard routers. Additionally, this special router would be costlier to produce because it requires more expensive materials and an expensive new machine. If this modified router is costlier to produce and KMB pays a lower price, then this deal might not be profitable for your division. a. What will be the change in your division's operating income if you accept KMB Technology's special order? (1 point) b. What is the lowest acceptable price per unit you should accept for this modified router for KMB Technology? (1 point) Requirement 5. Performance evaluation Assume you are at the end of FVX2 and your division chose to introduce the new product, routers, during the year as described in Requirement 3. Operating results by quarter for FYX2 are included in the project data file in the "Operating Results FYX2" worksheet. These operating results reflect revenues and expenses for ethernet repeaters and routers in FYX2 but do not reflect KMB Technology's special order from Requirement 4 (i.e., the data provided reflect FYX2 revenues and expenses for ethernet repeaters and standard routers only). Assume your division's average investment in operating assets for FYX2 (not including the asset purchase required for the KMB Technology special order) was $84.5 million. a. What is your division's return on sales for FYX2 without the KMB Technology special order? (1 point) d. What is your division's return on investment for FYX2 without the KMB Technology special order? (1 point) c. What is your division's residual income for FYX2 without the KMB Technology special order? (Assume the minimum required rate of return on investment in assets for your division is 11%.) ( point) d. Now assume you accepted KMB Technology's special order as described in Requirement 4. Based on your analysis in Requirement 4, how did the special order affect your division's ROS, ROI, and residual income? ROS (with KMB order) ( point) ROI (with KMB order) (1 poput) Residual income (with KMB order) (1 point) Requirement 6: Management's analysis of FYX2 operating results Write a buef suruparx (no more than 2 paragraphs) of your division's FYX2 operating results for your company's Chief Financial Officer and discuss your division's performance assuming you accepted the KMB Technology special order. Was accepting the special order the right decision? (2 points) Requirement 4: KMB Technology special order Assume your division chose to introduce routers in FYX2 (as described in Requirement 3). You have been approached by a new customer, KMB Technology, to fulfill a one-time special order for a modified version of your division's router that would require special materials and a modified production process. KMB wants to purchase 10,000 units of this special router at $150 per unit. Your division has enough excess capacity to produce the modified router for KMB without interfering with existing business. The materials required for this special order will cost 20% more than materials for the standard router and a new machine that costs 3210,000 will be required. Otherwise, all manufacturing costs would be the same as the costs to produce routers for regular customers (as described in Requirement 3). Aggume the new machine required for this special order has no alternate uses and no salvage value. No sales commissions would be paid on this special ord w Your first reaction to this special order is negative because KMB wants to pay significantly less than the $300 selling price regular customers pay for standard routers. Additionally, this special router would be costlier to produce because it requires more expensive materials and an expensive new machine. If this modified router is costlier to produce and KMB pays a lower price, then this deal might not be profitable for your division. a. What will be the change in your division's operating income if you accept KMB Technology's special order? (1 point) b. What is the lowest acceptable price per unit you should accept for this modified router for KMB Technology? (1 point) Requirement 5. Performance evaluation Assume you are at the end of FVX2 and your division chose to introduce the new product, routers, during the year as described in Requirement 3. Operating results by quarter for FYX2 are included in the project data file in the "Operating Results FYX2" worksheet. These operating results reflect revenues and expenses for ethernet repeaters and routers in FYX2 but do not reflect KMB Technology's special order from Requirement 4 (i.e., the data provided reflect FYX2 revenues and expenses for ethernet repeaters and standard routers only). Assume your division's average investment in operating assets for FYX2 (not including the asset purchase required for the KMB Technology special order) was $84.5 million. a. What is your division's return on sales for FYX2 without the KMB Technology special order? (1 point) d. What is your division's return on investment for FYX2 without the KMB Technology special order? (1 point) c. What is your division's residual income for FYX2 without the KMB Technology special order? (Assume the minimum required rate of return on investment in assets for your division is 11%.) ( point) d. Now assume you accepted KMB Technology's special order as described in Requirement 4. Based on your analysis in Requirement 4, how did the special order affect your division's ROS, ROI, and residual income? ROS (with KMB order) ( point) ROI (with KMB order) (1 poput) Residual income (with KMB order) (1 point) Requirement 6: Management's analysis of FYX2 operating results Write a buef suruparx (no more than 2 paragraphs) of your division's FYX2 operating results for your company's Chief Financial Officer and discuss your division's performance assuming you accepted the KMB Technology special order. Was accepting the special order the right decision? (2 points)