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##### 8-39 Target costing: return on sales Stacy Yoo, pr...

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8-39 Target costing: return on sales Stacy Yoo, president of Caremore, Inc., an appliance manufacturer in Seattle, Washington, has been trying to decide whether one of her product-line managers, Bill Mann, has been achieving the companywide return-on-sales target of 45%. Stacy has just received data from the new target costing system regarding Bill's operation. Bill's sales volume was 300,000 appliances with an average selling price of \$500 and expenses totaling \$90 million. Required: Determine whether Bill's return-on-sales ratio has met the companywide target. Has Bill done a good or a poor job? Explain.,Hi, i think the profit margin is: Sales (300,000 units x \$500) \$150,000,000 Less: Expenses 90,000,000 = Profit Margin (ROS x Sales) \$60,000,000 ROS x \$150,000,000 = \$60,000,000, so ROS = 40%. Because the given expenses are \$90 millon, no \$90 per unit

Paper#3321 | Written in 18-Jul-2015

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