Problem 22-5A (Part Level Submission) Optimus 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, 2017, and relevant budget data are as follows. Actual Sales Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative expenses $1,401,000 675,000 126,000 170,000 81,000 Comparison with Budget $100,000 favorable 55,000 unfavorable 24,000 unfavorable On target On target Average operating assets for the year for the Home Division were $2,000,000 which was also the budgeted amount. OPTIMUS COMPANY Home Division Responsibility Report For the Year Ended December 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Sales 1301000 1401000 100,000 Favorable Variable Costs Cost of Goods Sold 620000 675000 55000 Unfavorable Selling and Administrative 102000 126000 24000 Unfavorable Total Variable Costs 722000 801000 79000 Unfavorable Contribution Margin 579000 600000 21000 Favorable Controllable Direct Fixed Costs Cost of Goods Sold 170000 170000 Neither Favorable nor Unfavorable Selling and Administrative 81000 81000 Neither Favorable nor Unfavorable Total Controllable Direct Fixed Costs 251000 251000 Neither Favorable nor Unfavorable v Controllable Margin 328000 349000 21000 Favorable $ 1 ROI 16.4 % 17.5 % 1.1 % Favorable Cli THIC Onn Shoulou (c) Compute the expected ROI in 2017 for the Home Division, assuming the following independent changes to actual data. (Round ROI to 1 decimal place, e.g. 1.5.) The expected ROI (1) Variable cost of goods sold is decreased by 7%. % (2) Average operating assets are decreased by 12%. % (3) Sales are increased by $201,000, and this increase is expected to increase contribution margin by $85,000. %