An investment centre generated a contribution margin of $200,000, fixed costs of $100,000 and sales of $1,000,000.The centre's average operating assets were $400,000.How much is the return on investment?

Question

Quizplus · Accepted Answer

Return on Investment (ROI) is calculated as Net Operating Income divided by Average Operating Assets. The Net Operating Income is the Contribution Margin minus Fixed Costs, which is $200,000 - $100,000 = $100,000. Therefore, ROI = $100,000 / $400,000 = 0.25 or 25%.

An Investment Centre Generated a Contribution Margin of $200,000, Fixed