GIVEN: Sales.......................................21,000,000 Variable Expenses.
ID: 2371961 • Letter: G
Question
GIVEN:Sales.......................................21,000,000
Variable Expenses........................13,400,000
Contribution Margin..................... 7,600,000
Fixed Expenses.......................... 5,920,000
Net Operating Income.................. 1,680,000
Divisional Operating Income........... 5,250,000
Opportunity to add a new product line which requires an investment of $3,000,000.
Sales.......................................9,000,000
Variable Expenses.......................65% of sales
Fixed Expenses.......................... 2,250,000
Question:
Compute the ROI with new product line added.
Explanation / Answer
Additional income is 9,000,000*(1-.65) -2,250,000= 900,000 So ROI is 900,000/3,000,000= 30%
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.