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The Pacific Division of Crane Industries reported the following data for the current year. Sales $4,015,342 Variable costs 2,602,000 Controllable fixed costs 802,000 Average operating
The Pacific Division of Crane Industries reported the following data for the current year.
Sales | $4,015,342 | ||
Variable costs | 2,602,000 | ||
Controllable fixed costs | 802,000 | ||
Average operating assets | 5,011,000 |
Top management is unhappy with the investment centers return on investment. It asks the manager of the Pacific Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action.
1. | Increase sales by $402,000 with no change in the contribution margin percentage. | ||
2. | Reduce variable costs by $120,264. | ||
3. | Reduce average operating assets by 4% |
Using ROI formula, compute the ROI under each of the proposed courses of action. (Round answers to 1 decimal place, e.g. 52.7%.) Courses of action ROI 1. % 2. % 3. %
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