Question Details

(Solved) Wolfe Computer manufactures computers and peripheral equipment. The following data relate to...


                                                                                                                                        Wolfe Computer manufactures computers and peripheral equipment. The following data relate to Wolfe’s Printer Division for the year just ended:   Contribution margin  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $11,000,000 Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              6,000,000 Average total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             50,000,000   The Printer Division is evaluated as an investment center. Wolfe expects all of its investment cen- ters to earn a minimum annual return of 10 percent on average invested capital. Division managers receive a bonus equal to 1 percent of their division’s residual income. The Printer Division’s most popular product is a color printer called the XLC. The division has the capacity to manufacture 30,000 XLCs per year, at a manufacturing cost of $100 per unit. Last year it produced XLCs at full capacity; 25,000 of these printers were sold to independent computer stores for $250 per unit, and the other 5,000 were transferred to Wolfe’s Mail-Order Division, which sells them for $300 per unit. Transfers of inventory among units of Wolfe Computer are recorded in the company’s accounting records at cost. As Wolfe’s new controller, you are attending a planning meeting of division managers. Kay Green, manager of the Mail-Order Division, has asked for 15,000 XLCs in the coming year. She states, “Net income will increase if the Mail-Order Division sells more XLCs. After all, we get the highest sales price.” David Lee, manager of the Printer Division, replies, “Sorry, Kay, we can’t do that. Just look at last year—if we’d supplied you with 15,000 XLCs, we wouldn’t have made minimum ROI.”   Instructions a.      Compute the Printer Division’s ROI and residual income based on last year’s data. b.      Evaluate the statements made by Green and Lee. (Show how supplying 15,000 XLCs to Mail- Order would have affected the Printer Division’s ROI for last year.) c.      Offer suggestions to resolve this situation. Show how your suggestions would have affected the Printer Division’s results last year if they had been in effect then. d.      Do you think that your comments in part c might raise an ethical dilemma to be resolved by Wolfe’s top management? If so, explain the nature of this potential problem and your per- sonal recommendations about how to resolve it. (Hint: Expect to hear from Lee before the day is over.)  

 


Solution details:

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
SiteLock

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Oct 15, 2019

EXPERT

Tutor

ANSWER RATING

YES, THIS IS LEGAL

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

  • As a reference for in-depth understanding of the subject.
  • As a source of ideas / reasoning for your own research (if properly referenced)
  • For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

NEW ASSIGNMENT HELP?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.

Order Now