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Sheridan Company has gathered the following information concerning one model of shoe: Variable manufacturing costs $32000 Variable selling and administrative costs $16000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1800000 ROI 50% Planned production and sales 5000 pairs What is the desired ROI per pair of shoes?

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hyderali230

Answer:

$180 per pair

Explanation:

Return on Investment (ROI) is the ratio of net earning on the investment. It is used for the financial decision to compare different companies total earning over amount invested by the company.

Return on Investment = Net Income / Investment

As per given Condition

50% = Net Income / $1,800,000

Net income = $1,800,000 x 50%

Net income = $900,000

Net Income per pair of shoes = $900,000 / 5,000 pairs = $180 per pair

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