Question

200 g ments/2849766 Current Attempt in Progress The South Division of Wig Company reported the following data for the c enter SLADDO 2015CO Variable costs Controllable food costs 60.000 5.000.000 Average operating sets Top management is app with the investment centers return on investment R independent courses of action itades the manager of the South Division to submit plans to improve On the ot year. The m ost believesi .com the following 1 Increase sales by $100.000 with no change in the contribution margin percentage 2 Reduce variable costs by $155.000 3- Reduce average operating sets by 5% (A Compute the return on investment IRON for the current year (Round Roto 2 decimal places 1.57% Return on investment Using the ROI formula compute the ROI under each of the proposed courses of action Round Rolo 2 decimal e s Return on investment Action 1 Action 2 Action 3 e Textbook and Media 34 PM A 4 11/1/2019 search

Answer 1

rate positively ..

	Given that -
	i	sales		3050000
	ii	Variable cost		2043500
	iii	Controllable fixed cost		605000
	iv	Net profit		401500
	v	Average operating assets		5000000
	vi=(i-ii)/i	Contribution margin %		33.00%
ans A	return on investment = iv/v			8.03%
and b)	Action 1
	i	revised sales = 3050000+300000		3350000
	ii=i*33%	Contribution margin =		1105500
	iii	Controllable fixed cost		605000
	iv=ii-iii	Net profit		500500
		Average operating assets		5000000
		ROI =		10.01%
	Action 2
		sales		3050000
		Variable cost		1888500
		Controllable fixed cost		450000
		Net profit		711500
		Average operating assets		5000000
		ROI		14.23%
	Action 3	Reduce average operating asset by 5%
		Net profit		401500
		Average asset =		4750000
		ROI		8.45%