Question
The New Athletics New Athletics Company produces a wide variety of outdoor sports equipment. Its newest division, Golf Technology, manufactures and sells a single productlon
The New Athletics New Athletics Company produces a wide variety of outdoor sports equipment. Its newest division, Golf Technology, manufactures and sells a single productlon dashAccuDriver,
a golf club that uses global positioning satellite technology to improve the accuracy of golfers' shots. The demand for AccuDriver is relatively insensitive to price changes. The following data are available for Golf Technology, which is an investment center for New Athletics.
| Total annual fixed costs | $28,000,000 |
| Variable cost per AccuDriver | $350 |
| Number of AccuDrivers sold each year | 160,000 |
| Average operating assets invested in the division | $44,000,000 |
Requirements
| 1. | Compute Golf Technology's ROI if the selling price of AccuDrivers is $ 570$ per club. |
| 2. | If management requires an ROI of at least 30% from the division, what is the minimum selling price that the Golf Technology Division should charge per AccuDriver club? |
| 3. | Assume that New Athletics New Athletics judges the performance of its investment centers on the basis of RI |
| than ROI. What is the minimum selling price that Golf Technology should charge per AccuDriver if the company's required rate of return is 22%? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started