The Appliance Division of Kenmore Corporation reported the following results for 2016:

Sales Revenue $10,000,000

Variable costs 3,000,000

Controllable fixed costs 1,500,000

Average operating assets 6,000,000

Management is considering the following independent alternative

courses of action in 2017 in order to maximize the return on

investment for the division.

1. Reduce controllable fixed costs by 9% with no change in sales

or variable costs.

2. Reduce average operating assets by 12% with no change in

controllable margin.

3. Increase sales 15% with no change in the contribution margin

percentage.

INSTRUCTIONS

(a) Compute the return on investment for 2016.

(b) Compute the expected return on investment for each of the

alternative courses of action.