Question

The service division of Raney Industries reported the following results for 2017. $580,400 Sales Variable costs 348,240 Controllable fixed costs 76,600 674,300 Average operating assets Management is considering the following independent courses of action in 2018 in order to maximize the return on investment for this division. 1. Reduce average operating assets by $125,900, with no change in controllable margin 2. Increase sales $109,800, with no change in the contribution margin percentage. *(a) Your answer is correct. Compute the controllable margin and the return on investment for 2017. (Round ROI to 1 decimal place, e.g. 1.5.) Controllable margin 5556 Return on investment for 2017 *(b) Compute the controllable margin and the expected return on investment for each proposed alternative (Round ROI to 1 decimal place, e.g. 1.5.) Alternative Alternative The controllable margin The expected return on investment Attempts: 0 of 15 used

Answer 1

23.1%

28.4%

26.6%

Step-by-step explanation:

A) THE CONTROLLABLE MARGIN & EXPECTED ROI = 23.1%

B) THE CONTROLLABLE MARGIN & EXPECTED ROI UNDER ALTERNATIVE 1 and ALTERNATIVE 2 are =28.4% and 26.6%

Further explanations on how I arrived at this answer is in the attached file, please kindly go through it.