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The South Division of Wig Company reported the following data for the current year.

Sales

Variable costs

Controllable fixed costs

Average operating assets

$2,950,000

1,947,000

605,000

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.

2.

3.

Increase sales by $300,000 with no change in the contribution margin percentage.

Reduce variable costs by $155.000.

Reduce average operating assets by 5%.

(a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%)

Return on Investment

%

(b) Using the ROI formula, compute the ROl under each of the proposed courses of action. (Round ROl to 2 decimal places, eg. 1.57%.)

Return on investment

Action 1

Action 2

Action 3

%

%

%

Current Attempt in Progress The South Division of Wing 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. 2 Increase sales by $300,000 with no change in the contribution margin percentage Reduce variable costs by $155,000 Reduce average operating assets by 5%. 3 (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, eg 1.57%) Return on investment 96 (b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round Rol to 2 decimal places, c.8. 1.57%.) Return on investment Action 1 Action 2 96 Action 3 %

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