Question

Boris Jasper is the manager of an auto parts division for a large auto parts supplier. The division makes dampers and oil pumps.

Identify three things Boris could do to increase the division’s ROI in the coming year. (You may select more than one answer.)

a) Raise the sales revenue.
b) Decrease the cost of raw materials.
c) Decrease discretionary fixed cost.
d) Reduce the selling price per unit.
e) Borrow funds at a higher rate of interest.

Answer 1

a) Raise the sales revenue.

b) Decrease the cost of raw materials.

c) Decrease discretionary fixed cost

Step-by-step explanation:

Return on Investment (ROI) = Divisional Profit Contribution / Assets Employed in the Division

ROI increases when the Divisional Profit Contribution increased and Assets Employed in the Division are reduced.