Question
Marigold Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data
Marigold 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 $1,400,000 $100,000 favorable Variable cost of goods sold Variable selling and administrative expenses 680,000 56,000 unfavorable 124,000 24,000 unfavorable Controllable fixed cost of goods sold 169,000 On target Controllable fixed selling and administrative expenses 83,000 On target Average operating assets for the year for the Home Division were $2,000,000, which was also the budgeted amount. Sales Variable Costs Cost of Goods Sold Budget 1300000 Actual 1400000 624000 i 680000 i 124000 i Selling and Administrative 100000 Total Variable Costs Contribution Margin Controllable Direct Fixed Costs Cost of Goods Sold 724000 i 804000 i 5760001 596000 169000 169000 i Selling and Administrative 83000 Total Controllable Direct Fixed Costs 252000 Controllable Margin 324000 ROI 83000 2520001 344000 162 % 17.2 % 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%.) (1) Variable selling and administrative expenses are decreased by 6%. (2) Average operating assets are decreased by 20.0%. (3) Sales are increased by $199,000, and this increase is expected to increase contribution margin by $86,000. The expected ROI 19.24 % %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started