Question
The service division of Raney Industries reported the following results for 2017. Sales $510,800 Variable costs 306,480 Controllable fixed costs 74,500 Average operating assets 643,000
The service division of Raney Industries reported the following results for 2017.
Sales $510,800 Variable costs 306,480 Controllable fixed costs 74,500 Average operating assets 643,000
Management is considering the following independent courses of action in 2018 in order to maximize the return on investment for this division.
1. Reduce average operating assets by $123,900, with no change in controllable margin. 2. Increase sales $100,200, with no change in the contribution margin percentage.
Compute the controllable margin and the return on investment for 2017. (Round ROI to 1 decimal place, e.g. 1.5.)
Controllable margin $ Return on investment for 2017 %
Compute the controllable margin and the expected return on investment for each proposed alternative. (Round ROI to 1 decimal place, e.g. 1.5.)
Alternative 1 Alternative 2 The controllable margin $ $ The expected return on investment % %
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