Question

If an investment center has a $90,000 controllable margin and $1,200,000 of sales, what average operating assets are needed to have a return on investment of 10%

Answer 1

Average operating assets is $900,000

Step-by-step explanation:

The formula for return on investment stated below is the starting for solving this question:

return on investment= Net operating income / Average operating assets

return on investment is 10%

net operating income is the same as controllable margin of $90,000

Average operating assets is the unknown

10%=90000/average operating assets

average operating assets=90000/10%

average operating assets=$900,000