Kenco Pharmaceuticals is evaluating its Brown division, an investment center. The division has a $45,000 controllable margin and $300,000 of sales. How much will Kenco's average operating assets be when its return on investment is 10%?

Question

Quizplus · Accepted Answer

Return on Investment (ROI) is calculated as Controllable Margin divided by Average Operating Assets. Given ROI is 10% and Controllable Margin is $45,000, we can set up the equation: $45,000 / Average Operating Assets = 0.10. Solving for Average Operating Assets gives $450,000.

Kenco Pharmaceuticals Is Evaluating Its Brown Division, an Investment Center