For its three investment centers, Gerrard Company accumulates the following data: II III Sales $1,900,000 $4,075,000 $4,069,000 Controllable margin Average operating assets 912,240 1,838,390 4,209,800 5,068,000 7,993,000 12,028,000 The centers expect the following changes in the next year: (I) increase sales 14%; (II) decrease controllable fixed costs $376,000; (III) decrease average operating assets $491,000. Compute the expected return on investment (ROI) for each center. Assume center I has a contribution margin percentage of 70%. (Round ROI to 1 decimal place, e.g. 1.5.) I II III The expected return on investment % %
For its three investment centers, Gerrard Company accumulates the following data: II III Sales $1,900,000 $4,075,000 $4,069,000 Controllable margin Average operating assets 912,240 1,838,390 4,209,800 5,068,000 7,993,000 12,028,000 The centers expect the following changes in the next year: (I) increase sales 14%; (II) decrease controllable fixed costs $376,000; (III) decrease average operating assets $491,000. Compute the expected return on investment (ROI) for each center. Assume center I has a contribution margin percentage of 70%. (Round ROI to 1 decimal place, e.g. 1.5.) I II III The expected return on investment % %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fabd6f274-73f1-4c4d-8a54-e869eb8a0377%2Febe30cd9-6bfe-4e9d-9538-58f97592cbc8%2Fzoj08g.png&w=3840&q=75)
Transcribed Image Text:### Analysis of ROI for Gerrard Company's Investment Centers
#### Current Data:
For its three investment centers, Gerrard Company accumulates the following data:
| | I | II | III |
|---------|---------------|---------------|---------------|
| **Sales** | $1,900,000 | $4,075,000 | $4,069,000 |
| **Controllable Margin** | $912,240 | $1,838,390 | $4,209,800 |
| **Average Operating Assets** | $5,068,000 | $7,993,000 | $12,028,000 |
#### Expected Changes in the Next Year:
- Center I expects Sales to increase by 14%.
- Center II expects a decrease in controllable fixed costs of $376,000.
- Center III expects a decrease in average operating assets of $491,000.
#### Expected Return on Investment (ROI):
Compute the expected Return on Investment (ROI) for each center. Assume center I has a contribution margin percentage of 70%.
**Note:** Round ROI to one decimal place (e.g., 1.5).
| | I | II | III |
|--------|------|------|------|
| The expected return on investment | _____% | _____% | _____% |
To learn effective methods for calculating ROI and understanding the impacts of different financial changes, please [click here](#).
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