CinRich Corporation recorded operating data for its Waterhole division for the year. CinRich requires a 9% rate of return.

Sales $500,000

Controllable margin 90,000

Total average assets 300,000

Fixed costs 30,000

Residual income 50,000

Suppose CinRich experiences an increase of $50,000 in controllable fixed costs. Will the new ROI be acceptable?

• A. No. The ROI drops to less than 9%.
• B. There is not enough information to determine the new ROI.
• C. Yes. The ROI will remain at 30% which exceeds the required ROI.
• D. Yes. The new ROI is still above the required ROI.