For its three investment centers, Gerrard Company accumulates the following data

Question

For its three investment centers, Gerrard Company accumulates the following data:

I

II

III

The centers expect the following changes in the next year: (I) increase sales 20%; (II) decrease costs $426,000; (III) decrease average operating assets $508,000.

Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 70%

I

II

III

Sales $2,080,000 $4,050,000 $3,989,000 Controllable margin 1,255,250 1,823,900 4,090,880 Average operating assets 5,021,000 7,930,000 12,032,000

Explanation / Answer

I Next year II Next year III Next year Sales $2,080,000 $2,496,000.0 $4,050,000 $4,860,000.0 $3,989,000 $4,786,800.0 Controllable margin 1,255,250 1,747,200 1,823,900 $2,916,000.0 4,090,880 $2,872,080.0 Average operating assets 5,021,000 4,513,000 7,930,000 7,422,000 12,032,000 11,524,000 ROI 39% 39% 25%

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.