Concept explainers
The South Division of Wiig Company reported the following data for the current
year.
Sales | $3,000,000 |
Variable costs | 1,950,000 |
Controllable fixed costs | 600,000 |
Average operating assets | 5,000,000 |
Top management is unhappy with the investment centers
1. increase sales by $300,000 with no change in the contribution margin percentage,
2. Reduce variable costs by $150,000.
3. Reduce average operating assets by 4%.
Instructions
(a) Compute the return on investment (ROI) for the current year.
(b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round to one decimal.)
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Managerial Accounting: Tools for Business Decision Making
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