For its three investment centers, Martinez Company accumulates the following data: Sales Controllable margin Average operating assets I $1,920,000 1,392,000 4,800,000 || $3,840,000 1,996,800 7,865,000 ||| $3,840,000 3,594,240 9,600,000 The company expects the following changes for investment centers I, II, and III in the next year: investment center I to increase sales 15%, investment center II to decrease controllable fixed costs $520,000, and investment center III to decrease average operating assets $384,000. Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin percentage of 73%. What is the expected ROI for investment center l?
For its three investment centers, Martinez Company accumulates the following data: Sales Controllable margin Average operating assets I $1,920,000 1,392,000 4,800,000 || $3,840,000 1,996,800 7,865,000 ||| $3,840,000 3,594,240 9,600,000 The company expects the following changes for investment centers I, II, and III in the next year: investment center I to increase sales 15%, investment center II to decrease controllable fixed costs $520,000, and investment center III to decrease average operating assets $384,000. Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin percentage of 73%. What is the expected ROI for investment center l?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
Transcribed Image Text:For its three investment centers, Martinez Company accumulates the following data:
Sales
Controllable
margin
Average
operating assets
I
$1,920,000 $3,840,000
1,392,000
||
4,800,000
1,996,800
7,865,000
III
$3,840,000
3,594,240
9,600,000
The company expects the following changes for investment centers I, II, and III in the next year: investment center I to increase sales
15%, investment center II to decrease controllable fixed costs $520,000, and investment center III to decrease average operating assets
$384,000.
Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin percentage of
73%.
What is the expected ROI for investment center I?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education