Two segments (Mountain Bike and Road Bike) showed the following data for the most recent year:

                                                                                                           Mountain Bike                  Road Bike

Contribution to indirect expenses                                                     $ 840,000                    $ 504,000
Assets directly used by and identified with the segment                $2,520,000                   2,184,000
Sales                                                                                                      $3,360,000                 $ 6,720,000

1. Calculate return on investment for each segment in the most direct manner.

2. Calculate return on investment using the margin and turnover components.

Calculate the new margin, turnover, and return on investment of the Mountain Bike segment for each of the following changes. Consider each change independently of the others.

a. Direct variable expenses were reduced by $33,600. Sales and assets were unaffected.

b. Assets used by the segment were reduced by $540,000, while income and sales were unaffected.

c. An advertising campaign increased sales by $336,000 and income by $50,000. Assets directly used by the segment were unaffected.

Answer rating: 100% (QA)

ROI Income Assets 100 Using the given data lets calculate the ROI for each segment For the Mountain Bike segment Income Sales Contribution to indirect ... View the full answer