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23-18 ROI and RI. (D. Keespie, adapted) The Outdoor Sports Company produces a wide variety...

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Accounting

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23-18 ROI and RI. (D. Keespie, adapted) The Outdoor Sports Company produces a wide variety of out- door sports equipment. Its newest division, Golf Technology, manufactures and sells a single product- AccuDriver, a golf club that uses global positioning satellite technology to improve the accuracy of golfers' shots. The demand for Acc Driver is relatively insensitive to price changes. The following data are available for Golf Technology, which is an investment center for Outdoor Sports: Total annual fixed costs $30,000,000 Variabia cost per AccuDriver $ 500 Number of AccuDrivers sold each year 150,000 Average operating assets invested in the division $48,000,000 1. Compute Golf Technology's Rol if the selling price of Accu Drivers is $720 per club. 2. If management requires an Rol of at least 25% from the division, what is the minimum selling price that the Golf Technology Division should charge per Accu Driver club? 3. Assume that Outdoor Sports judges the performance of its investment centers on the basis of Rl rather than ROI. What is the minimum selling price that Golf Technology should charge per AccuDriver if the company's required rate of return is 20%? Required

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