Answered

Explore IDNLearn.com's extensive Q&A database and find the answers you need. Get accurate and timely answers to your queries from our extensive network of experienced professionals.

Waterway Industries recorded operating data for its auto accessories division for the year.
Sales $870000
Contribution margin 320000
Total direct fixed costs 90000
Average total operating assets 500000
How much is ROI for the year if management is able to identify a way to improve the contribution margin by $40000, assuming fixed costs are held constant?

Sagot :

Answer:

the return on investment is 54%

Explanation:

The computation of the return on investment is given below:

= Net operating income ÷ average operating assets

= ($320,000 + $40,000 - $90,000) ÷ $500,000

= $270,000 ÷ $500,000

= 54%

hence, the return on investment is 54%

We simply applied the above formula so that the correct amount could come

Thank you for joining our conversation. Don't hesitate to return anytime to find answers to your questions. Let's continue sharing knowledge and experiences! Thank you for visiting IDNLearn.com. We’re here to provide clear and concise answers, so visit us again soon.