The following data are available for the South Division of Redride Products, Inc. and the single product it makes:
-How many units must South sell each year to have an ROI of 16%?
A)240,000
B)1,300,000
C)52,000
D)65,000

Question

The following data are available for the South Division of Redride Products, Inc. and the single product it makes: 
-How many units must South sell each year to have an ROI of 16%?
A)240,000 
B)1,300,000 
C)52,000 
D)65,000

Quizplus · Accepted Answer

ROI = Net operating income F1F1F1S1F1F1F10 Average operating assets
Net operating income = ROI F1F1F1S1F1F1F10 Average operating assets
= 16% F1F1F1S1F1F1F10 $1,500,000 = $240,000
Unit sales to attain a target profit = (Target profit + Fixed expenses)F1F1F1S1F1F1F10 Unit CM
= ($240,000 + $280,000)F1F1F1S1F1F1F10 ($20 per unit - $12 per unit)
= $520,000 F1F1F1S1F1F1F10 $8 per unit
= 65,000 units

The Following Data Are Available for the South Division of Redride