ABC Fitness is a regional chain of fitness clubs. Each clubs manager has the authority to make investments as needed and is evaluated based largely on ROI. ABC Fitnesss Brampton club reported the following results for the past year:

Sales	$250,000
Variable costs	162,500
Controllable fixed costs	80,300
Average operating assets	90,000

Instructions

(a) Assume that the manager of the club is able to increase sales by $40,000. Further assume that this is possible without any increase in operating assets or controllable fixed costs. Compute the base-line and the adjusted ROIs. What should the manager do?