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The Blue division ofthe Leaf Company reported the following data for the current year: Variable Costs Controllable Fixed Costs $400,000 Average Operating Assets 55.050000 Senior Management is unhappy with the investment centre's return on investment. It asks the manager of the Blue division to submit plans to improve the ROI in the next year. The manager believes it is reasonable to consider each of the following independent courses of action. 1. Increase sales by $30,000 with no change in the contribution margin percentage 2. Reduce variable costs by $120,000 3. Reduce average operating assets by 4.5% Required: a. Calculate the return on investment for the current year. b. Using the ROI formula, calculate the RBI under each of the proposed courses of action {Round to one decimal} Devon Firm is considering whether to outsource the manufacture of subcomponent XYZ. The accounting department provides the following cost information for manufacturing 10,000 units of the subcomponent XYZ per month. Direct Material Costs $42,500 Direct Labour Costs $32,000 Variable Overhead $15,000 Fixed Overhead* $12,500 *Fixed overhead includes $5,000 Supervisor's salary. Stadia Firm agrees to supply Devon with 10,000 units per month for a total cost of $122,500. If the subcomponent XYZ is outsourced, Devon will be able to increase the production and sales of its final product by 1,000 units per month, which is sold for $104 per unit and its average variable costs per unit are $72. The supervisor's salary will be eliminated if subcomponent XYZ is outsourced. Required: a. Prepare an incremental analysis for the subcomponent XYZ. Your analysis should have columns for (1) Make the subcomponent XYZ, (2) Buy the subcomponent XYZ, and (3) Incremental Costs (Savings) b. Based on your analysis, what decision should management make? c. Would the decision be different if Devon has the opportunity to produce 2,000 units with the facilities currently being used to manufacture the subcomponent XYZ? Show calculations