The following data refers to the Daniels division of Tippett Inc. Daniels sells variable-speed drills. The standard drill sells for $ 40, and Daniels plans sales of 30,000 units in 2005. Tippett treats Daniels as an investment center with total attributable investment of $ 800,000. Daniels' annual fixed costs are $ 200,000. Variable cost per standard drill is $ 24. The firm's required rate of return on investment is 15%. The manager is evaluated based on Residual Income.

20.1 What is the planned Return on Investment in 2005? ____________________________

20.2 A one-time external special order is received to buy from Daniel, 10,000 units of the standard drill at $30 each. If the order is accepted, Daniels will have to incur additional annual fixed costs of $30,000. Based on the effect on Residual Income for the first year, will the manager accept this order? 20.3 Effect on RI for first year _______________ Will accept: Yes or No