ACC 560 MART Learn by Doing/acc560mart.com ACC 560 MART Learn by Doing/acc560mart.com | Page 45

Variable costs 1,950,000 Controllable fixed costs 600,000 Average operating assets 5,000,000 Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. 1. Increase sales by $300,000 with no change in the contribution margin percentage. 2. Reduce variable costs by $150,000. 3. Reduce average operating assets by 4%. Instructions 1. year. Compute the return on investment (ROI) for the current 2. Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round to one decimal.) Prepare a responsibility report for an inve stment center. P10-5A