Makayla is told by the head of her department that their unit must increase its return on assets (ROA) ratio from 3% to 5% by next year. If they do not, they risk losing certain benefits. Makayla goes to her office and thinks about how she could handle this. First, she thinks about ways to increase revenue. Then, she notices that there are several assets that produce very little revenue. She suggests selling these items to help the department achieve its target ROA.

• Do you agree with reasoning and decisions made in each scenario? Why or why not?
• Are these scenarios in the realm of managerial accounting, financial accounting, or both? Why do think this?
• How would you proceed in each situation? What information would you want to have, and why?

Answer rating: 100% (QA)

Scenario 1 Makayla suggests ways to increase revenue to achieve the target ROA ratio This scenario i... View the full answer