Data for the investment centers for Kaspar Company are given in BE21-9. The centers expect the following
Question:
(I) Increase sales 15%;
(II) Decrease costs $200,000;
(III) Decrease average operating assets $400,000. Compute the expected return on investment (ROI) for each center. Assume center I has a contribution margin percentage of 75%.
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...
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II I A 300000 2000000 X 15 increase in sales will increase contribution margi...View the full answer
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Related Book For 
Accounting Tools for business decision making
ISBN: 978-0470095461
4th Edition
Authors: kimmel, weygandt, kieso
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