Answer Happy

The following information applies to the budgeted operations of
the Howareyou division of Question Company:
€
Sales revenue (75,000 units at €8)
600,000
Variable costs (75,000 units at €6)
450,000
Contribution


150,000
Fixed Costs


100,000
Divisional Profit for the period

50,000
Divisional Investment

350,000
The minimum desired return on investment is the cost of capital
of 16 per cent a year.
1) The divisional expected ROI is:
2) The divisional expected RI is:
3) The result must be considered:
The division has the opportunity to sell an additional 10,000
units at €7.50. Variable cost per unit would be the same as
budgeted, but fixed costs would increase by €5,500. Additional
investment of €20,000 would be required. If the manager accepted
this opportunity, by how much and in what direction would the
residual income change?
Enter only plain numbers in the blank fields (no comma or
thousand separators)
4) Increase in sales revenue? € Answer
5) increase in variable costs? € Answer
6) increase in contribution? € Answer
7) increase in fixed costs? € Answer
8) increase in divisional profit: € Answer
9) increase in cost of capital: € Answer
10) increase in residual income: € Answer