Do It! Review 10-4 (Part Level Submission)

The service division of Raney Industries reported the following results for 2020.

Sales		$494,000
Variable costs		296,400
Controllable fixed costs		69,200
Average operating assets		642,000

Management is considering the following independent courses of action in 2021 in order to maximize the return on investment for this division.

1.		Reduce average operating assets by $128,400, with no change in controllable margin.
2.		Increase sales $113,955, with no change in the contribution margin percentage.

(a)

Compute the controllable margin and the return on investment for 2020.

Controllable margin		$
Return on investment for 2020			%

Compute the controllable margin and the expected return on investment for 2021 for each proposed alternative. (Round ROI to 1 decimal place, e.g. 1.5%.) Alternative 1 Alternative 2 The controllable margin $ $ The expected return on investment % %