Presented below is information related to the Southern Division of Lumber, Inc. Contribution margin ....... $1,200,000 Controllable

Question:

Presented below is information related to the Southern Division of Lumber, Inc.
....... $1,200,000
Controllable margin ....... $ 800,000
Average operating assets ..... $3,200,000
Minimum rate of return .... 16%
Compute the Southern Division’s return on investment and residual income.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...