The binding division of Canada Boardz Corp. reported the following data for the current year: Sales ..
Question:
The binding division of Canada Boardz Corp. reported the following data for the current year:
Sales …………………………………….. $4,000,00
Variable costs …………………………… 2,940000:
Controllable fixed costs ……………….. 900,000
Average operating assets …………….. 6,150,000
Top management is unhappy with the investment centre's return on investment. It asks the manager of the binding 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 S360,000 with no change in the contribution margin percentage.
2. Reduce variable costs by 5120,000.
3. Reduce average operating assets by 5%.
Instructions
(a) Calculate the return on investment for the current year
(b) Using the ROI formula, calculate the ROI under each of the proposed courses of action. (Round to one decimal.)
Expert Answer:
a Calculation of return on investment for the current year Sales 4000000 Less Variable Cost 240... View the full answer
