The Appliance Division of Quayle Manufacturing Company reported the following results for 2010:
Management is considering the following independent alternative courses of action in 2011 in order to maximize the return on investment for the division.
1. Reduce controllable fixed costs by 20% with no change in sales or variable costs.
2. Reduce average operating assets by 20% with no change in controllable margin.
3. Increase sales $400,000 with no change in the contribution margin percentage.
Instructions
(a) Compute the return on investment for 2010.
(b) Compute the expected return on investment for each of the alternative courses of action.

Question

The Appliance Division of Quayle Manufacturing Company reported the following results for 2010:  
Management is considering the following independent alternative courses of action in 2011 in order to maximize the return on investment for the division.
1. Reduce controllable fixed costs by 20% with no change in sales or variable costs.
2. Reduce average operating assets by 20% with no change in controllable margin.
3. Increase sales $400,000 with no change in the contribution margin percentage.
Instructions
(a) Compute the return on investment for 2010.
(b) Compute the expected return on investment for each of the alternative courses of action.

Quizplus · Accepted Answer

The Answer of The Appliance Division of Quayle Manufacturing Company reported the following results for 2010:  
Management is considering the following independent alternative courses of action in 2011 in order to maximize the return on investment for the division.
1. Reduce controllable fixed costs by 20% with no change in sales or variable costs.
2. Reduce average operating assets by 20% with no change in controllable margin.
3. Increase sales $400,000 with no change in the contribution margin percentage.
Instructions
(a) Compute the return on investment for 2010.
(b) Compute the expected return on investment for each of the alternative courses of action.

The Appliance Division of Quayle Manufacturing Company Reported the Following