Question
The South Division of Wiig Company reported the following data for the current year. Sales $3,038,000 Variable costs 2,017,232 Controllable fixed costs 598,500 Average operating
The South Division of Wiig Company reported the following data for the current year.
Sales $3,038,000
Variable costs 2,017,232
Controllable fixed costs 598,500
Average operating assets 4,952,100
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 $320,000 with no change in the contribution margin percentage.
2. Reduce variable costs by $154,600.
3. Reduce average operating assets by 4%.
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