Sales Controllable margin $2,320,000 1,682,000 $4,640,000 $4,640,000 2,412,800 4,256,000 Average operating assets 5,800,000 8.890.000 11,600,000 The company expects the following changes for investment centers I, II, and III in the next year: investment center I to increase sales 15%, investment center II to decrease controllable fixed costs $432,000, and investment center III to decrease average operating assets $400,000. Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin percentage of 73% (Round ROI to 1 decimal place, e.g. 1.5%.)

Sales Controllable margin $2,320,000 1,682,000 $4,640,000 $4,640,000 2,412,800 4,256,000 Average operating assets 5,800,000 8.890.000 11,600,000 The company expects the following changes for investment centers I, II, and III in the next year: investment center I to increase sales 15%, investment center II to decrease controllable fixed costs $432,000, and investment center III to decrease average operating assets $400,000. Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin percentage of 73% (Round ROI to 1 decimal place, e.g. 1.5%.)

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter11: Performance Evaluation And Decentralization

Section: Chapter Questions

Problem 43P: Return on Investment and Economic Value Added Calculations with Varying Assumptions Knitpix Products...

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