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DO 29 20% Sun 3:54 PM a E Safari File Edit View History Bookmarks Develop Window Help edugen.Wileyplus.com Wiley PLUS d Budget Chegg Return to Blackboard Wiley PLUS mel, Accounting: Tools for Business Decision Making, 5e I System Announcements (1 Unread Assignment Open Assignment CALCULATOR PRINTER ON BACK NEXT The West Division of Nieto Company reported the following data for the current year. ASSIGNMENT RESOURCES Chapter 22 Homework-- Fall 2015 $2,971,400 Sales M E 22-1 Variable costs 1,903,900 22-2 Controllable fixed costs 591,010 22-3 Average operating assets 4,913,600 22-5 Ex 22-9 Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the West Division to submit plans to improve ROI in the next year. The manager 22-13 believes it is feasible to consider the following independent courses of action. 22-16 1. Increase sales by $320,230 with no change in the contribution margin percentage. 22 2. Reduce variable costs by $159,350 3. Reduce average operating assets by 3% Review Score Review Results by Study Objective Compute the return on investment (ROI) for the current yea (Round ROI to 1 decimal place, e.g. 1.5%.) Return on Investment LINK TO TEXT Using the ROI formula, compute the ROI under each of the proposed courses of action (Round ROT to 1 decimal place, e.g. 1.5%) Return on investment Action 1 Action 2 Action 3 License Agreement Privacy Policy I 2000-2015 John Wiley & Sons, Inc. All Rights Reserved. A Division of John Wiley & Sons, Inc 4.16.2.2Explanation / Answer
ROI = net operating income / average operating assets
ROI = $476,490/ 4,913,600 = 9.70%
Action 1 original contribution margin= 35.9258262%
ROI = $591,535/ $4913,600 = 12.04 or 12%
Action 2
ROI = 635,840/4913,600 = 12.90%
Action 3 $1913,600 @97% = $4766,192
ROI = $476,490 / $4766,192
= 10%
Sales $2,971,400 Less: Variable cost 1,903,900 Contribution margin 1,067,500 Less: Controllable fixed cost 591,010 Net income $476,490Related Questions
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