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Ayayai Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for
Ayayai Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2022, and relevant budget data are as follows. Actual Comparison with Budget Sales $1,399,000 $100,000 favorable Variable cost of goods sold 670,000 54,000 unfavorable Variable selling and administrative expenses 124,000 24,000 unfavorable Controllable xed cost of goods sold 169,000 On target Controllable xed selling and administrative expenses 79,000 On target Average operating assets for the year for the Home Division were $2,000,000, which was also the budgeted amount. Compute the expected ROI in 2022 for the Home Division, assuming the following independent changes to actual data. (Round ROI to 2 decimal places, e.g. 1.57%.) The expected ROI (1) Variable selling and administrative expenses are decreased by 6%. % (2) Average operating assets are decreased by 12.5%. % (3) Sales are increased by $199,000, and this increase is expected to increase contribution margin by $84,000. %
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