Current Attempt in Progress The South Division of Ayayai Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 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 $2,900,000 1,943,000 590,000 5,000,000 3. Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $150,000. Reduce average operating assets by 3.00%. (al Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places en 1571

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Chapter15: Decision Analysis
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(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%)
Action 1
Action 2
Action 3
Return on investment
%
Transcribed Image Text:(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%) Action 1 Action 2 Action 3 Return on investment %
Current Attempt in Progress
The South Division of Ayayai Company reported the following data for the current year.
Sales
Variable costs
Controllable fixed costs
Average operating assets
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.
3.
$2,900,000
1,943,000
590,000
5,000,000
Increase sales by $300,000 with no change in the contribution margin percentage.
Reduce variable costs by $150,000,
Reduce average operating assets by 3.00%.
(a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%)
Return on Investment
Transcribed Image Text:Current Attempt in Progress The South Division of Ayayai Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 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. 3. $2,900,000 1,943,000 590,000 5,000,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $150,000, Reduce average operating assets by 3.00%. (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%) Return on Investment
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