Reference no: EM131776163
The valve division of Bendix Inc produces a small valve that is used by various companies as a component in their products. Each division is expected to generate a rate of return of at least 14% on its operating assets. The valve division has avg operating assets of $700,000. The valves are sold for $5 each. Variable costs are $3 per valve, and fixed costs total $462,000 per year. The division has a capacity of 300,000 valves each year.
Question1. How many valves must the Valve division sell each year to generate the desired rate of return on its assets?
What is the margin earned at the level of sales?
What is the capital turnover earned at this level of sales?
B: Assume that the Valve Divisions current ROI equals the minimum required rate of 14%. In order to increase the divisions ROI the manager wants to increase the selling price of the valve by 4%. Market studies indicate that an increase in the selling price would cause sales to drop by 20,000 units each year. However, operating assets could be reduced by $50,000 due to decreased needs for account receivable and inventory. Compute sales margin, capital turnover and ROI if these changes are made. You must show your work.
C: In addition to the financial perspective, there are three other perspectives of the balanced scorecard. List these three others and give an example of how each may be related to the financial perspective.