the Vice President for operations is evaluating the performance of two

PROBLEM 4 (12 Points) The vice president for operations is evaluating the performance of two divisions organkzed as investment centers. Invested assets and condensed income statement data for t year for each division are as follows: he past Division X $2,500,000 S1,320,000 S930,000 Sales Cost of Goods Sold Operating expenses Invested Assets Division Y $2,550,000 $1350,000 $843,000 1521,75,000 1,275,000 REQUIRED: a. Compute the Rate of Return for each division. b. If management requires an 18%, return determine the residual income for each division. PROBLEM 5 (14 Points) Carn and val Toys produces a plastic three-ring circus set which includes a tent, circus figures animals. The set is sold to department stores for $100. The capacity of the plant is 20,000 sets per year. Production costs per set are as follows: Direct Material S15 S10 S20 Direct labor Variable selling Variable overhead Total Fixed Overhead for the year S550,000 A major Canadian store, which had previously not purehased from Carnival has approached the marketing manager about buying 5,000 sets for $85 US each. No selling expenses would be incurred on this offer, but the Canadian firm wants its store name on the package. This means an additional S1 US cost per set. Because the company is currently selling 18,000 sets, acceptance of this job would it to reject some of its current business. REQUIRED: a. What is the current operating income of Carnival? b. If Carnival accepted the offer, what would be the operating income of the company? Should they accept the offer? Why/why not? If carnival were currently selling only 10,000 sets per year and the company wanted to earn $150,000 of operating income for the year, what per unit selling price for the 5,000 would Carnival have to counteroffer to the Canadian firm? c