Posted: August 28th, 2016

What average unit sales price does the Portland division need to obtain its desired rate ?

Consider the following data regarding budgeted operations for 20X7 of the Portland division of Machine Products:
______________________________________________________________________
Average total assets
Receivables $220,000
Inventories 290,000
Plant and equipment, net 450,000
Total $960,000
Fixed overhead $300,000
Variable Costs $1 per unit
Desired rate o return on average total assets 25%
Expected volume 150,000 units
______________________________________________________________________
1. a. What average unit sales price does the Portland division need to obtain its desired
rate of return on average total assets:
b. What would be the expected capital turnover?
c. What would be the return on sales?
2. a. If the selling price is as previously computed, what rate of return will the division
earn on total assets if sales volume is 170,000 units?
b. If sales volume is 130,000 units?