For its three investment centers, Pharoah Company accumulates the following data: Sales Controllable margin Average operating assets 11 111 $2,080,000 $3,956,000 $4,033,000 1,974,525 1,455,480 3,625,638 4,966,000 7,975,000 12,122,000 The company expects the following changes for investment centers I, II, and III in the next year: investment center I increase sales 16%, investment center II decrease controllable fixed costs $410,000, and investment center III decrease average operating assets $464,000. Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin percentage of 70%. (Round ROI to 1 decimal place, e.g. 1.5%) The expected return on investment 11 III
For its three investment centers, Pharoah Company accumulates the following data: Sales Controllable margin Average operating assets 11 111 $2,080,000 $3,956,000 $4,033,000 1,974,525 1,455,480 3,625,638 4,966,000 7,975,000 12,122,000 The company expects the following changes for investment centers I, II, and III in the next year: investment center I increase sales 16%, investment center II decrease controllable fixed costs $410,000, and investment center III decrease average operating assets $464,000. Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin percentage of 70%. (Round ROI to 1 decimal place, e.g. 1.5%) The expected return on investment 11 III
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:For its three investment centers, Pharoah Company accumulates the following data:
Sales
Controllable margin
Average operating assets
11
$2,080,000 $3,956,000 $4,033,000
1,974,525
3,625,638
7,975,000
12,122,000
1,455,480
4,966,000
The company expects the following changes for investment centers I, II, and III in the next year: investment center Il increase sales
16%, investment center II decrease controllable fixed costs $410,000, and investment center III decrease average operating assets
$464,000.
The expected return on
investment
Compute the expected return on investment (ROI) for each center. Assume investment center I has a contribution margin
percentage of 70%. (Round ROI to 1 decimal place, e.g. 1.5%)
%
11
%
|||
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