Question
Lombard, Inc. has two investment centers and has developed the following information: Department A Department B Departmental controllable margin $120,000 ? Average operating assets ?
Lombard, Inc. has two investment centers and has developed the following information: Department A Department B Departmental controllable margin $120,000 ? Average operating assets ? $400,000 Sales 800,000 250,000 ROI 10% 12% Answer the following questions about Department A and Department B.
1. What was the amount of Department A's average operating assets? Average Operating Assets $ ?
2. What was the amount of Department B's controllable margin? Controllable Margin $ ?
3. If Department B is able to reduce its operating assets by $100,000, what would be Department B's new ROI ? New ROI %?
4. If Department A is able to increase its controllable margin by $60,000 as a result of reducing variable costs, what would be Department A's new ROI? New ROI %?
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