Question
The South Division of Carla Vista Company reported the following data for the current year. Sales $3,000,000 Variable costs 2,010,000 Controllable fixed costs 605,000 Average
The South Division of Carla Vista Company reported the following data for the current year.
| Sales | $3,000,000 | |
| Variable costs | 2,010,000 | |
| Controllable fixed costs | 605,000 | |
| Average operating assets | 5,000,000 |
Top management is unhappy with the investment centers return on investment (ROI). It asks the manager of the South 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 $300,000 with no change in the contribution margin percentage. | |
| 2. | Reduce variable costs by $155,000. | |
| 3. | Reduce average operating assets by 3.00%. |
(a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%.)
| Return on Investment | Enter the return on investments in percentages rounded to two decimal places | % |
(b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%.)
| Return on investment | |||
|---|---|---|---|
| Action 1 | Enter percentages rounded to 2 decimal places | % | |
| Action 2 | Enter percentages rounded to 2 decimal places | % | |
| Action 3 | Enter percentages rounded to 2 decimal places | % | |
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
Maintenance Audits Handbook A Performance Measurement Framework
Authors: Diego Galar Pascual, Uday Kumar
1st Edition
1466583916, 978-1466583917
