For its three investment centers, Gerrard Company accumulates the following data: Sales Controllable margin Average operating assets I $2,000,000 1,400,000 5,000,000 || $4,000,000 2,000,000 8,000,000 III $4,000,000 3,600,000 10,000,000 The centers expect the following changes in the next year: (I) increase sales 15%; (II) decrease costs $400,000; (III) decrease average operating assets $500,000. Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 70%.

For its three investment centers, Gerrard Company accumulates the following data: Sales Controllable margin Average operating assets I $2,000,000 1,400,000 5,000,000 || $4,000,000 2,000,000 8,000,000 III $4,000,000 3,600,000 10,000,000 The centers expect the following changes in the next year: (I) increase sales 15%; (II) decrease costs $400,000; (III) decrease average operating assets $500,000. Compute the expected return on investment (ROI) for each center. Assume center I has a controllable margin percentage of 70%.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 3QE

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