The South Division of Wig Company reported the following data for the current year.

Sales $2,950,000

Variable costs 1,947.000

Controllable fixed costs 603,000

Average operating assets 5,000,000

Top management is unhappy with the investment center's return on investment (ROl). It asks the manager of the South Division to submit plans to improve ROl 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 5%.

(a) Compute the return on investment (ROl) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%.)

Return on Investment

(b) Using the ROl formula, compute the ROl under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57: