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The service division of Raney Industries reported the following results for 2020. Sales$518,000Variable costs310,800Controllable fixed costs82,400Average operating assets624,000 Management is considering the following independent courses

The service division of Raney Industries reported the following results for 2020.

Sales$518,000Variable costs310,800Controllable fixed costs82,400Average operating assets624,000

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 $124,800, with no change in controllable margin.2.Increase sales $106,080, with no change in the contribution margin percentage.

Compute the controllable margin and the expected return on investment for 2021 for each proposed alternative.

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