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Coldstream Inc. managers are considering alternative strategies to improve ROI from its current budgeted 20% for the coming year. Alternative 1 has more money spent
Coldstream Inc. managers are considering alternative strategies to improve ROI from its current budgeted 20% for the coming year. Alternative 1 has more money spent on advertising to increase sales while alternative 2 has the budget for meals and entertainment expenses eliminated with a drop off in sales as a result. Adjustments to operating assets are anticipated in each of the two alternatives as well. The numbers as in the original budget and in the two alternatives are set out below: ORIGINAL BUDGET ALTERNATIVE 1 ALTERNATIVE 2Sales110,000105,00090,0000perating expenses80,00090,00070,000Average operating assets100,000105,00093,000What is the relative ranking based upon ROI of the above three choices (highest to lowest)? a. Original Budget, Alternative 2, Alternative 1 b. Original Budget, Alternative 1, Alternative 2 c. Alternative 1, Alternative 2, Original Budget d. Alternative 2, Original Budget, Alternative 1
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