3 - Benoit Limited manufactures electronics equipment including drones for recreational use. The Drone Division has average operating assets of $2,000,000. The drones have a selling price of $250 each, variable costs are $150 per drone, and fixed costs total $500,000 per year. The company's desired annual return on average operating assets is 15%. Required: 1-a. Last year the company sold 10,000 drones. What was the residual income? 1-b. What was ROI? 2-a. Assume next year the company wants to increase residual income by $100,000. How many units must be sold to achieve that goal assuming there are no changes to selling price, variable costs, fixed costs, or average operating assets? 2-b. What will ROI be at that level of sales? At what level of unit sales will the Drone Division just meet its target of a 15% return on average operating assets? 4-a. Assume that sales of the existing drone model will continue at 10,000 units per year but a new model could be introduced that would require capital expenditures of $400,000. Management expects that 1,000 units of the new drone could be sold per year at a price of $325 per drone and variable costs of $200 per drone. Annual fixed costs of $50,000 would be incurred for the new model. Would the manager of the Drone Division likely accept or reject the proposal to develop the new drone model? 4-b. From the company's perspective, should the new drone model be introduced? multiple choice Yes No