The South Division of Monty Company reported the following data for the current year.
able[[Sales,$2,950,000
The South Division of Monty Company reported the following data for the current year
Sales
$2.950.000
Variable costs
1.947,000
Controllable fixed costs
605,000
Average operating assets
5,000,000
Top management is unhappy with the investment center's return on investment (ROI).It asks the manager of the South Division to submit plans to improve ROI in the next year.The manager believes it is feasible to consider the following independent courses of action
1.
Increase sales by $300,000 with no change in the contribution margin percentage
2.
Reduce variable costs by$155.000
3.
Reduce average operating assets by 3.00%
Return on Investment
%
(b)Using the ROI equation,compute the ROI under each of the proposed courses of action.(Round ROI to 2 decimal places,e.g.1.57%.
Return on investment
Action1
%
Action 2
%
Action 3
%