Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The service division of Raney Industries reported the following results for 2020. Sales $500,000 Variable costs 300,000 Controllable fixed costs 75,000 Average operating assets 625,000
The service division of Raney Industries reported the following results for 2020.
Sales | $500,000 | |
Variable costs | 300,000 | |
Controllable fixed costs | 75,000 | |
Average operating assets | 625,000 |
Management is considering the following independent courses of action in 2021 in order to maximize the return on investment for this division.
1. | Reduce average operating assets by $125,000, with no change in controllable margin. | |||||||||
2. | Increase sales $100,000, with no change in the contribution margin percentage.ompute the controllable margin and the return on investment for 2020.
|
X Your answer is incorrect. Compute the controllable margin and the expected return on investment for 2021 for each proposed alternative. (Round ROI to 1 decimal place, e.g. 1.5%.) Alternative 1 Alternative 2 The controllable margin $ 165000 600000 The expected return on investment 33 % 60 % e Textbook and Media
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started