Brief Exercise 22-10 For its three investment centers, Gerrard Company accumulat

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Brief Exercise 22-10 For its three investment centers, Gerrard Company accumulates the following data:
I II III Sales $1,940,000 $3,938,000 $3,914,000 Controllable margin 941,640 2,466,670 4,022,370 Average operating assets 4,956,000 7,957,000 12,189,000
The centers expect the following changes in the next year: (I) increase sales 16%; (II) decrease controllable fixed costs $396,000; (III) decrease average operating assets $504,000.
Compute the expected return on investment (ROI) for each center. Assume center I has a contribution margin percentage of 78%. (Round ROI to 1 decimal place, e.g. 1.5.)
I II III The expected return on investment % % % Brief Exercise 22-10 For its three investment centers, Gerrard Company accumulates the following data: Sales Controlliable margin Average operating assets 4,956,000 7,957,000 2,189,000 $1,940,000 $3,938,000 $3,914,000 941,640 2,466,670 4,022,370 The centers expect the following changes in the next year: (1) increase sales 16%; (II) decrease controllable fixed costs $396,000; (III) decrease average operating assets $504,000. Compute the expected return on investment (ROI) for each center. Assume center I has a contribution margin percentage of 78%. (Round R01 to 1 decimal place, e.g. 1.5.) The expected return on investment Click if you would like to Show Work for this questioni Open Show Work By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor Question Attempts: O of S used SAVE FOR LATERSUBAIT ANSWER

Explanation / Answer

Computation of Expected Return on investment: I II III A Sales 1940000 3938000 3914000 B Contribution Margin (78%) 1513200 C Controllable Margin 941640 2466670 4022370 D Controllable Fixed Costs (B-C) 571560 E Increased Sales (A*116%) 2250400 F Contribution Margin (78%) 1755312 G Controllable Fixed Costs 571560 I Decrease in Controllable Fixed Costs 396000 J Revised Controllable Margin 1183752 2070670 4022370 K Average Operating Assets 4956000 7957000 12189000 L Revised Averge Operating Assets 4956000 7957000 11685000 M Expected Return on Investment (J/L) 23.89 26.02 34.42

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