Question

Required information Problem 11-40 Profitability Analysis; Pro Forma Income Statement [LO 11-5, 11-7) (The following information applies to the questions displayed below.) Part 3 of 3 RayLok Incorporated has invented a secret process to improve light intensity and, as a result, manufactures a variety of products related to this process. Each product is independent of the others and is treated as a separate profit/loss division. Product (division) managers have a great deal of freedom to manage their divisions as they think best. Failure to produce target divisional income is dealt with severely; however, rewards for exceeding one's profit objective are, as one division manager described them, lavish. 11.12 points Skipped The DimLok Division sells an add-on automotive accessory that automatically dims a vehicle's headlights by sensing a certain intensity of light coming from a specific direction. DimLok has had a new manager in each of the 3 previous years because each manager failed to reach RayLok's target profit level. Donna Barnes has just been promoted to manager and is studying ways to meet the current target profit for DimLok. eBook DimLok's two profit targets for the coming year are $1,000,000 (20% return on the investment in the annual fixed costs of the division) and $40 (pre-tax) profit for each DimLok unit sold. Other constraints on the division's operations are as follows: • Production cannot exceed sales because RayLok's corporate advertising program stresses completely new product models each year, although the models might have only cosmetic changes. • DimLok's selling price cannot vary above the current selling price of $320 per unit but may vary as much as 5% below $320. • A division manager can elect to expand fixed production or selling facilities; however, the target profit objective related to fixed costs is increased by 20% of the cost of any such expansion. Furthermore, a manager cannot expand fixed facilities by more than 30% of existing fixed cost levels without approval from the board of directors.
This problem has 3 parts. This is part 3 . It should have all the information because the 3 parts information is the same.

Thanks.

Answer 1

Answer Page: No © To stress the firm's differentiation based on the Ennovation Critical success factors for Dimlok inclus --de research & development to maintain technological adva -notage of their exique produes & schong advertising progorams. To maintain the product differentiation, the quality of production and customer service are also inckeded in other strategic success factors ·