Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Camping Division of GH Company is operated as atprofit center. Sales for the division were budgeted for 2020 at $698,000. The only variable costs

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
The Camping Division of GH Company is operated as atprofit center. Sales for the division were budgeted for 2020 at $698,000. The only variable costs budgeted for the division were cost of goods sold ($334,000) and selling and administrative ($48,000). Fixed costs were budgeted at $76,000 for cost of goods sold, $68,000 for selling and administrative, and $70,000 for noncontrollable fixed costs. Actual results for these items were: Upon further analysis, GH Company determined that if it committed to a 12 month advertising campaign costing $16,000, it could increase budgeted sales by 25%. Variable costs also will increase by 25%. Fixed cost of goods sold would remain at $76,000 and selling and administrative expenses increases by the $16,000 cost of this contract to a total of $84,000. Noncontrollable fixed costs would remain at $70,000. This plan resulted in the following actual results: Assume the division is an investment center, and average operating assets were $1,000,000. The noncontrollable fixed costs are controllable at the imvestment center level. Compute ROI. (Round onswer to 2 decimal places, e.g. 15.25\%.) Return on investment Indicate the impact of the change on ROI. (Round answer to 2 decimal places, e.8. 15.25\%.) Return on irvestrnen Assume the division is an investment center, and average operating assets were $1,000,000. The noncontrollable fixed costs are controllable at the investment center level. Compute ROI. (Round answer to 2 decimal places, e.g. 15.25\%.) Return on investment %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Customer Satisfaction Audit

Authors: Abram I Bluestein, Michael Moriarty, Ronald J Sanderson

1st Edition

190243398X, 978-1902433981

More Books

Students also viewed these Accounting questions