The Atlantic Division of Stark Productions Company reported the following results for 2016: Sales $4,000,000 Variable costs
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Question:
The Atlantic Division of Stark Productions Company reported the following results for 2016:
Sales | $4,000,000 |
Variable costs | 3,200,000 |
Controllable fixed costs | 300,000 |
Average operating assets | 2,500,000 |
Management is considering the following independent alternative courses of action in 2017 in order to maximize the return on investment for the division.
1. Reduce controllable fixed costs by 10% with no change in sales or variable costs.
2. Reduce average operating assets by 10% with no change in the controllable margin.
3. Increase sales by $500,000 with no change in the contribution margin percentage.
Required:
1. Compute the return on investment for 2016.
2. Compute the expected return on investment for each of the alternative courses of action.
Related Book For
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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