Betsy Union is the Crane Company manager and her performance is evaluated by executive management based on Division ROI. The current controllable margin for Crane Company is $58000. Its current operating assets total $220000. The division is considering purchasing equipment for $40000 that will increase contribution margin by an estimated $13000, with annual depreciation of $13000. If the equipment is purchased, how will the return on investment for the division change? O It will remain unchanged O A decrease of 0.9% O An increase of 0.9% O A decrease of 4.1%
Betsy Union is the Crane Company manager and her performance is evaluated by executive management based on Division ROI. The current controllable margin for Crane Company is $58000. Its current operating assets total $220000. The division is considering purchasing equipment for $40000 that will increase contribution margin by an estimated $13000, with annual depreciation of $13000. If the equipment is purchased, how will the return on investment for the division change? O It will remain unchanged O A decrease of 0.9% O An increase of 0.9% O A decrease of 4.1%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Betsy Union is the Crane Company manager and her performance is evaluated by executive management based on Division ROI. The
current controllable margin for Crane Company is $58000. Its current operating assets total $220000. The division is considering
purchasing equipment for $40000 that will increase contribution margin by an estimated $13000, with annual depreciation of
$13000. If the equipment is purchased, how will the return on investment for the division change?
O It will remain unchanged
O A decrease of 0.9%
O An increase of 0.9%
O A decrease of 4.1%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0d1f03dc-16fb-4834-9136-6d6472c9ed62%2F32775765-37fc-423c-9285-525db6a80572%2Fpbxwslv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Betsy Union is the Crane Company manager and her performance is evaluated by executive management based on Division ROI. The
current controllable margin for Crane Company is $58000. Its current operating assets total $220000. The division is considering
purchasing equipment for $40000 that will increase contribution margin by an estimated $13000, with annual depreciation of
$13000. If the equipment is purchased, how will the return on investment for the division change?
O It will remain unchanged
O A decrease of 0.9%
O An increase of 0.9%
O A decrease of 4.1%
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