FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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For its three investment centers, Gerrard Company accumulates the following data:
Sales
Controllable margin
Average operating assets
I
$1,940,000
1,358,000
4,956,000
The expected return on
investment
||
$3,938,000 $3,914,000
3,522,600
12,189,000
1,969,000
7,957,000
The centers expect the following changes in the next year: (I) increase sales 16%: (II) decrease costs $396,000; (III) decrease average
operating assets $504,000.
Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 70%.
(Round ROI to 1 decimal place, e.g. 1.5%.)
23.9 %
11
35.9
%
34.4
%
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Transcribed Image Text:For its three investment centers, Gerrard Company accumulates the following data: Sales Controllable margin Average operating assets I $1,940,000 1,358,000 4,956,000 The expected return on investment || $3,938,000 $3,914,000 3,522,600 12,189,000 1,969,000 7,957,000 The centers expect the following changes in the next year: (I) increase sales 16%: (II) decrease costs $396,000; (III) decrease average operating assets $504,000. Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 70%. (Round ROI to 1 decimal place, e.g. 1.5%.) 23.9 % 11 35.9 % 34.4 %
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