The following information relates to budgeted operations of Division X of a manufacturing company.
|
Particulars |
Amount in rupees |
|
Sales – 50,000 units @ Rest. 8 |
4,00,000 |
|
Less : Variable Costs @ Rest. 6 per unit |
3,00,000 |
|
Contribution margin |
1,00,000 |
|
Less : Fixed Costs |
75,000 |
|
Divisional Profits |
25,000 |
The amount of divisional investment is Rs. 1,50,000 and the minimum desired rate of return on the investment is the cost of capital of 20%
Calculate
I] Divisional expected ROI and ii] Divisional expected RI