The service division of Retro Industries reported the following results for 2022. 

Management is considering the following independent courses of action in 2023 in order to maximize the return on investment for this division. 

1. Reduce average operating assets by $50,000, with no change in controllable margin. 

2. Increase sales by $100,000, with no change in the contribution margin percentage.

Instructions 

a. Calculate the controllable margin and the return on investment for 2022. 

b. Calculate the controllable margin and the expected return on investment for each proposed alternative.

Transcribed Image Text:

Sales Variable costs Controllable fixed costs Average operating assets $500,000 300,000 75,000 450,000