Determine whether Bill\'s return-on-sales ration has met the companywide target.

Question

Determine whether Bill's return-on-sales ration has met the companywide target. Has Bill done a good or a poor job? Explain based on the statement listed below.

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.

Explanation / Answer

total sale made by bill=300000*$500=$150 million net profit=150-90=$60 million Return on sales=60/150*100=40 % not a good job cannot reach 45% mark

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