Compute the expected ROI in 2022 for the Home Division, assuming the following independent changes to actual data. (Round ROI to 2 decimal places, e.g. 1.57%.) (1) (2) (3) Variable selling and administrative expenses are decreased by 6%. Average operating assets are decreased by 12.5%. Sales are increased by $200,000, and this increase is expected to increase contribution margin by $86,000. The expected ROI 19.19 20 23.49 % % %

Managerial Accounting
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ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
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Compute the expected ROI in 2022 for the Home Division, assuming the following independent changes to actual data. (Round
ROI to 2 decimal places, e.g. 1.57%.)
(1)
(2)
(3)
Variable selling and administrative expenses are decreased by 6%.
Average operating assets are decreased by 12.5%.
Sales are increased by $200,000, and this increase is expected to increase
contribution margin by $86,000.
The expected ROI
19.19
20
23.49
%
do
%
%
Transcribed Image Text:Compute the expected ROI in 2022 for the Home Division, assuming the following independent changes to actual data. (Round ROI to 2 decimal places, e.g. 1.57%.) (1) (2) (3) Variable selling and administrative expenses are decreased by 6%. Average operating assets are decreased by 12.5%. Sales are increased by $200,000, and this increase is expected to increase contribution margin by $86,000. The expected ROI 19.19 20 23.49 % do % %
Pronghorn Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each
division is an investment center. Operating data for the Home Division for the year ended December 31, 2022, and relevant budget
data are as follows.
Sales
Variable cost of goods sold
Variable selling and administrative expenses
Controllable fixed cost of goods sold
Controllable fixed selling and administrative expenses
Actual
$1,399,000
680,000
124,000
171,000
81,000
Comparison with Budget
$101,000 favorable
56,000 unfavorable
25,000 unfavorable
On target
On target
Average operating assets for the year for the Home Division were $2,000,000, which was also the budgeted amount.
Transcribed Image Text:Pronghorn Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2022, and relevant budget data are as follows. Sales Variable cost of goods sold Variable selling and administrative expenses Controllable fixed cost of goods sold Controllable fixed selling and administrative expenses Actual $1,399,000 680,000 124,000 171,000 81,000 Comparison with Budget $101,000 favorable 56,000 unfavorable 25,000 unfavorable On target On target Average operating assets for the year for the Home Division were $2,000,000, which was also the budgeted amount.
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