The Switch division of Tornax Inc. produces a small switch that is used by varlous companles as a component part in their products.

Tomax operates its divisions as autonomous unlts, giving its divisional managers great discretion In pricing and other decisions. Each

division is expected to generate a minimum required rate of return of at least $14\%$ on its operating assets. The Switch DIvision has

average operating assets of $$700,000.$ The swltches are sold for $$5$ each. Varlable costs are $$3$ per switch, and fixed costs total

$$462,000$ per year. The division has a capacity of $300,000$ switches each year.

Required:

How many switches must the Switch Division sell each year to generate the deslred rate of return on Its assets?

Number of switches

a$.$ What is the margin earned at this level of sales?

b$.$ What is the turnover at this level of sales?

& $3.$ Assume that the Switch DIvIsIon's current ROI equals the minimum required rate of $14\%.$ In order to Increase the division's ROI,

the divisional manager wants to increase the selling price per switch by $4\%.$ Market studies Indicate that an Increase in the selling price

would cause sales to drop by $20,000$ unlts each year. However, operating assets could be reduced by $$50,000$ due to decreased

needs for accounts recelvable and Inventory. Compute the margin, turnover, and ROI If these changes are made.

Refer to the original data. Assume again that the Switch DIvision's current ROI equals the minimum required rate of $14\%.$ Rather than

Increase the selling price, the sales manager wants to reduce the selling price per switch by $4\%.$ Market studies indicate that this

would fill the plant to capacity. In order to carry the greater level of sales, however, operating assets would Increase by $$50,000.$

Compute the margin, turnover, and ROI If these changes are made. $($Round your Intermedlate calculatlons and flnal answers to $2$

decimal places.$)$