Pro Forma Income Statement Sales CMR Company without Project Potential Project $ 1,000,000 $ 70% Company with Project 200,000 $ 60% 1,200,000 Variable Expenses Contribution Margin Fixed Expenses $ 500,000 $ 90,000 Operating Income Other Information Company Average Operating Assets DROI $ 625,000 $ 15% Potential Project Company with Project 120,000 1 Compute ROI and RI Margin Turnover ROI RI Company without project Potential Project Company with Project 2 If management was evaluated based on ROI, should the company accept the potential project? 3 Does the potential project provide a return beyond the company's minimum desired return? 4 Use Residual Income to evaluate whether taking on the project would benefit the company.