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Wildhorse produces and sells two products-aluminum and vinyl. Each of these products is made in a dedicated manufacturing facility, and the product line managers are
Wildhorse produces and sells two products-aluminum and vinyl. Each of these products is made in a dedicated manufacturing facility, and the product line managers are evaluated based on the product line's return on investment. The following data is from the most recent year of operations. Aluminum Vinyl Sales $6,000,000 $5,400,000 Variable costs 2,900,000 3,472,500 Direct fixed costs 1,600,000 1,533,300 Average assets 4,000,000 1,500,000 Both product line managers would like to improve their respective returns on investment, and each manager has a different idea about how to accomplish this. If the aluminum product line manager was able to increase sales volume such that the new asset turnover was 2.20 times, what would be the new operating income? (Round variable cost ratio to 2 decimal places, eg. 5.25 and final answers to O decimal places, eg. 12,500.) Operating income $ 600000 What would be the new return on investment? (Round ROI to 2 decimal places, e.g. 5.12%.) New ROI 55 %
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