requirments 1-3

Drew Deisel, majorify stockhoider and president of Deisel, ine, a wonkng with his top minggers on futre plans for the exmpany. As the corpany's managerial accountant you'vo been asked to ansigre the followith wituations and make recommendmions to the manapenent toam. Read the Roquirement 1, DMioion A of Deisel, Inc, has $5,300,000 in assels. Its yethy frod costs are 8697,000 , and the variable costs of iss product ine are $1.70 per unit. The division's volume is curtenty 1a. What is Divion A's target ful produd oos? 16. Cven the divich's currest costs, Wal Divinion A be atil so achiere its target proet? Bejn by calaiating Omion A current dat product cot1. Dvision A's curert ful produst conts are its trget sil product obst Eerelore Divise A be able to acheive ita tarost orofit Begin by calousting Divaion As new targel ficed cont. Win thi decuease h varuable coets alow the corroany to achieve at target grott? Sine the oompanys achai frowd costs are the tow tarpet fied coet aemount Division A be able to achivve ts target prodt without having to tave any other cos! eiltrgmeasures. able to sel at ptodict an the cont plis prow? Why of why at?? Division A of Deisel, Inc. has $5,300,000 in assets. Its yearly fixed costs are $697,000, and the costs of its product line are $1.70 per unit. The division's volume is currently 530,000 units. Competitors offer a similar product, at the same quality, to retailers for $4.00 each. Deisel's management team wants to earn a 10% return on investment on the division's assets. a. What is Division A's target full product cost? b. Given the division's current costs, will Division A be able to achieve its target profit? c. Assume Division A has identified ways to cut its variable costs to $1.55 per unit. What is its target fixed cost? Will this decrease in variable costs allow the division to achieve its target d. Division A is considering an aggresfive advertising campaign strategy to differentiate its proc from its competitors. The division does not expect volume to be affected, but it hopes to gain control over pricing. If Division A has to spend $135,000 next year to advertise and its variabl costs continue to be $1.55 per unit, what will its cost-plus price be? Do you think Division A w able to sell its product at the cost-plus price? Why or why not? 2. The division manager of Division B received the following operating income data for the past year: equirements Income Statement a. Prepare a differential analysis to show whether Division B should drop the T205 product line. accountant estimates that dropping the T205 product line will decrease fixed cost of goods sold by $77,000 and decrease fixed selling and administrative expenses by $19,000. a. Prepare a differential analysis to show whether Division B should drop the T205 product line. b. What is your recommendation to the manager of Division B ? 3. Division C also produces two product lines. Because the division can sell all of the product it can produce, Deisel is expanding the plant and needs to decide which product line to emphasize. To ma this decision, the division accountant assembled the following data: niti expaisiui, uie raciory will nave a production capacity of 4,100 machine hours per month. The plant can manufacture either 28 units of K707s or 45 units of G582s per machine hour. a. Identify the constraining factor for Division C. b. Prepare an analysis to show which product line to emphasize. 4. Division D is considering two possible expansion plans. Plan A would expand a current product line at a cost of $8,700,000. Expected annual net cash inflows are $1,650,000, with zero residual value at the end of 10 years. Under Plan B, Division D would begin producing a new product at a cost of $8,100,000. This plan is expected to generate net cash inflows of $1,050,000 per year for 10 years, the estimated useful life of the product line. Estimated residual value for Plan B is $1,200,000. Division D uses straight-line depreciation and requires an annual return of 8%