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Q 9.24: Dallas Manufacturing's vice president of marketing has been approached by a supplier of customer relation management software. It is claimed that the software
Q 9.24: Dallas Manufacturing's vice president of marketing has been approached by a supplier of customer relation management software. It is claimed that the software will enable Dallas to increase its sales volume by ten percent by targeting its advertisement on a well-defined consumer segment. The cost of the software and related services is $2,500,000 and will be depreciated over five years. Dallas' existing cash-basis income statement, which is based on sales of 125,000 units, is as shown below: Sales revenue Cost of goods sold (all variable) Gross margin Selling expense (variable) Fixed selling expense Fixed administrative expense Income $12,500,000 $5,000,000 $7,500,000 $1,000,000 $3,500,000 $2,250,000 $750,000 Calculate the accounting rate of return the new software is expected to generate
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