2 If management was evaluated based on ROI, should the company accept the potential project

ZOOM Company without Project Potential Project Company with Project Pro Forma Income Statement Sales CMR Variable Expenses Contribution Margin Fixed Expenses Operating Income Other Information Average Operating Assets DROI 1 Compute ROI and RI Margin Turnover ROI RI 1,000,000 $ 70% 500,000 $ 200,000 $ 60% 90,000 1,200,000 Company Potential Project 625,000 $ 15% 120,000 Company without project Potential Project Company with Project Company with Project 2 If management was evaluated based on ROI, should the company accept the potential project? 3 Does the potential project provide a return beyond the company's minimum desired return? 4 Use Residual Income to evaluate whether taking on the project would benefit the company.