Question
The service division of Metro Industries reported the following results for 2014. Sales $500,000 Variable costs 320,000 Controllable fixed costs 40,800 Average operating assets 280,000
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The service division of Metro Industries reported the following results for 2014.
Sales $500,000
Variable costs 320,000
Controllable fixed costs 40,800
Average operating assets 280,000
Management is considering the following course of action in 2015 in order to maximize the return on investment.
- Reduce average operating assets by $80,000, with no change in controllable margin.
Compute controllable margin and the expected return on investment for 2015.
Controllable margin is $180,000; expected return on investment for 2015 is 20.4%
Controllable margin is $180,000; expected return on investment for 2015 is 49.7%.
Controllable margin is $40,800; expected return on investment for 2015 is 20.4%.
Controllable margin is $139,200; expected return on investment for 2015 is 69.6%
The service division of Metro Industries reported the following results for 2014.
Sales $500,000
Variable costs 320,000
Controllable fixed costs 40,800
Average operating assets 280,000
Management is considering the following course of action in 2015 in order to maximize the return on investment.
- Reduce average operating assets by $80,000, with no change in controllable margin.
Compute controllable margin and the expected return on investment for 2015.
| Controllable margin is $180,000; expected return on investment for 2015 is 20.4%
| ||
| Controllable margin is $180,000; expected return on investment for 2015 is 49.7%.
| ||
| Controllable margin is $40,800; expected return on investment for 2015 is 20.4%.
| ||
| Controllable margin is $139,200; expected return on investment for 2015 is 69.6%
|
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