Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l }
\text { Revenues } & \$ 400,000 \
\text { Operating expenses } & \$ 360,000 \
\text { Operating income } & \$ 40,000 \
\text { Operating assets } & \$ 500,000
\end{array}$$
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that the Furniture Division believes that it can reduce operating expenses by $25,000. If revenues and operating assets stay at the same level, what would the division's ROI be? Would it reach its target ROI?

Question

Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l } 
\text { Revenues } & \$ 400,000 \
\text { Operating expenses } & \$ 360,000 \
\text { Operating income } & \$ 40,000 \
\text { Operating assets } & \$ 500,000
\end{array}$$ 
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that the Furniture Division believes that it can reduce operating expenses by $25,000. If revenues and operating assets stay at the same level, what would the division's ROI be? Would it reach its target ROI?

Quizplus · Accepted Answer

The Answer of Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l } 
\text { Revenues } & \$ 400,000 \
\text { Operating expenses } & \$ 360,000 \
\text { Operating income } & \$ 40,000 \
\text { Operating assets } & \$ 500,000
\end{array}$$ 
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that the Furniture Division believes that it can reduce operating expenses by $25,000. If revenues and operating assets stay at the same level, what would the division's ROI be? Would it reach its target ROI?

Use the Following Information to Answer Question Waverly Company Has Set a Target Return on Investment (ROI)