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Concept introduction:
The Return on Investment is also called ROI. The return means the profit you make as a result of your investments. Return on Investment is a performance measure used to evaluate the profitability or efficiency of an investments or compare the efficiency of a number of investments. ROI is generally defined as the ratio of net profit over the total cost of the investment. ROI is calculated by dividing the net income by the total cost of the investment.
The table showing the relation between sales and return on investment
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Concept introduction:
Return on investment:
The Return on Investment is also called ROI. The return means the profit you make as a result of your investments. Return on Investment is a performance measure used to evaluate the profitability or efficiency of an investments or compare the efficiency of a number of investments. ROI is generally defined as the ratio of net profit over the total cost of the investment. ROI is calculated by dividing the net income by the total cost of the investment.
What happened to the company’s return on investment as sales increase
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MANAGERIAL ACCT(LL)+CONNECT+PROCTORIO PL
- Only typing answer Please answer explaining in detail step by step without table and graph thankyouarrow_forwardPROBLEM 7 Tito Company sells several products. Information of average revenue and costs are as follows: Selling price per unitPhp20.00 Variable costs per unit: Direct materialsPhp4.00 Direct manufacturing labor Php1.60 Manufacturing overhead Php0.40 Selling costsPhp2.00 Annual fixed costs Php96,000 26. Calculate the contribution margin per unit. 27. Calculate the number of units Tito's must sell each year to break even. 28. Determine the breakeven point in peso. 29. Calculate the number of units Tito's must sell to yield a profit of Php144,000. PROBLEMarrow_forwardRequired Information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Percent Per Unit of sales $95 100% 57 60 $38 40% selling price variable expenses Contribution margin Fixed expenses are $79,000 per month and the company is selling 3,600 units per month. 2-a. Refer to the original data. How much will net operating Income Increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $3 per unit and increase unit sales by 10%. 2-b. Should the higher-quality components be used? Complete this question by entering your answers in the tabs below. Req 2A Req 28 Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher- quality components that increase the variable expense by $3 per unit and increase unit sales by 10%. Net operating income byarrow_forward
- Hi expart Provide solutionarrow_forwardRequired information [The following information applies to the questions displayed below.] Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin. Per Unit $ 55 33 Percent of Sales 100% 60 $ 22 40% Fixed expenses are $71,000 per month and the company is selling 4,100 units per month. 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-quality components that increase the variable expense by $4 per unit and increase unit sales by 25%. 2-b. Should the higher-quality components be used?arrow_forwardProblem II. Omega Enterprises sells two products, Model E100 and F900. Monthly sales and the contribution margin ratios for the two products, follow: Product E100 F900 Total Sales P 700,000 P 300,000 P 1,000,000 Contribution margin ratio 60% 70% The Company’s fixed expenses total P598,500 per month. What is the company’s total contribution margin ratio? What is the company’s total net operating income? The break-even point for the company based on the current sales mix is ______.arrow_forward
- Provide answer this questionarrow_forwardExercise 20.8 (Static) Using Cost-Volume-Profit Formulas (LO20-4, LO20-5, LO20-6) Arrow Products typically earns a contribution margin ratio of 32 percent and has current fixed costs of $1,640,000. Arrow's general manager is considering spending an additional $100,000 per year to do one of the following: 1. Start a new ad campaign that is expected to increase sales revenue by 4 percent. 2. License a new computerized ordering system that is expected to increase Arrow's contribution margin ratio to 36 percent. Sales revenue for the coming year was initially forecast to equal $6,400,000 (that is, without implementing either of the above options). Required: a-1. Compute the projected operating income for each option? a-2. For each option, how much will projected operating income increase or decrease relative to initial predictions? b. By what percentage would sales revenue need to increase above the current level of $6,400,000 to make the ad campaign as attractive as the ordering system?…arrow_forwardEXERCISE 9-10 Cost-Volume-Profit Analysis and Return on Investment (ROI) [LO9-1] Posters.com is a small Internet retailer of high-quality posters. The company has $1,000,000 in operating assets and fixed expenses of $150,000 per year. With this level of operating assets and fixed expenses, the company can support sales of up to $3,000,000 per year. The company's contribution margin ratio is 25%, which means that an additional dollar of sales results in additional contribution margin, and net operating income, of 25 cents. Required: 1. Complete the following table showing the relation between sales and return on investment (ROI). Net Operating Income Sales Average Operating Assets ROI $2,500,000 $475,000 $1,000,000 $2,600,000 $ ? $1,000,000 $2,700,000 $ ? $1,000,000 $2,800,000 $ ? $1,000,000 $2,900,000 $ ? $3,000,000 $ ? $1,000,000 $1,000,000 222222 ? ? ? ? ? ? 2. What happens to the company's return on investment (ROI) as sales increase? Explain.arrow_forward
- Chapter 6 RUN LIKE THE WIND PROFIT GOAL Please solve and explain the following problem "Run Like The Wind sells ceiling fans. Target profit for the year is $470,000. If each fans contribution margin is $32 and fixed costs total $222,640, what is the number of fans that must be sold to meet the company's goal?"arrow_forwardxit Data concerning Kardas Corporation's single product appear below: Percent of Per Unit Sales Selling price Variable expenses $ 140 100% 28 20% Contribution margin $ 112 80% The company is currently selling 8,000 units per month. Fixed expenses are $719,000 per month. The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?arrow_forwardPlease help me with show all calculation thankuarrow_forward
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