Current Attempt in Progress The South Division of Wiig Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 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 2. 3. $3,000,000 2,010,000 605,000 5,000,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $160.000. Reduce average operating assets by 3%. (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%.) Return on Investment (b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%)

Current Attempt in Progress The South Division of Wiig Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 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 2. 3. $3,000,000 2,010,000 605,000 5,000,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $160.000. Reduce average operating assets by 3%. (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%.) Return on Investment (b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, e.g. 1.57%)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 2STP

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