The Omaha Division, an investment center of Nebraska Manufacturing Company, reported the following data for the...

The Omaha Division, an investment center of Nebraska Manufacturing Company, reported the following data for the current year.

Sales $4,000,000

Variable costs 2,400,000

Controllable fixed costs 300,000

Noncontrollable fixed costs 400,000

Average operating assets 3,600,000

Top management is unhappy with the center's return on investment (ROI). The manager of the Omaha Division believes ROI can be improved by the following independent alternatives:

Increase sales by 15% with no change in the contribution margin ratio.
Reduce controllable and noncontrollable fixed costs 30% each.
Reduce average operating assets by 20%.

Instructions:

1. Compute the return on investment for the current year.

2. Compute ROI under each alternative.

Expert Solution

ekkarill92 answered 9 months ago

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