Reese Company has two investment centers and has developed the following information: Department B Department A Departmental controllable margin $150,000 ? 800,000 Average operating assets Sales ROI 10% ? $500,000 250,000 12%
Reese Company has two investment centers and has developed the following information: Department B Department A Departmental controllable margin $150,000 ? 800,000 Average operating assets Sales ROI 10% ? $500,000 250,000 12%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Answer the following questions about Department A and Department B.
1. What was the amount of Department A's average operating assets? $____________.
2. What was the amount of Department B's controllable margin? $____________.
3. If Department B is able to reduce its operating assets by $100,000, Department B's new
would be ____________.
4. If Department A is able to increase its controllable margin by $30,000 as a result of reducing
variable costs, Department A's new ROI would be _________________.
Transcribed Image Text:Reese Company has two investment centers and has developed the following information:
Department B
Department A
Departmental controllable margin $150,000
?
800,000
Average operating assets
Sales
ROI
10%
?
$500,000
250,000
12%
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