Do It! Review 24-4 (Part Level Submission) The service division of Raney Industr

Question

Do It! Review 24-4 (Part Level Submission) The service division of Raney Industries reported the following results for 2017 Sales Variable costs Controllable fixed costs Average operating assets $586,400 351,840 56,200 621,300 Management is considering the following independent courses of action in 2018 in order to maximize the return on investment for this division. 1. Reduce average operating assets by $123,200, with no change in controllable margin. 2. Increase sales $106,400, with no change in the contribution margin percentage Do It! Review 24-4 Secure https://edugen.wileyplus.com/eduge Solution Your answer is partially correct. Try again Compute the controllable margin and the return on investment for 2017. (Round ROI to 1 decimal place, e.g Controllable margin Return on investment for 2017 Do It! Review 24-4 (Part Level Submission) Controllable margin for 2017: 234560 Sales Variable costs Contribution margin Controllable fixed costs56,200 Controllable margin $178,360 $586,400 351,840 234,560 28.7 SHOW SOLUTIONSHOW ANSWER n on investment for 2017178.360 $621,300 28.7% LINK TO TEXT Compute the controllable margin and the expected return on investment for each proposed alternative. (Round ROI to 1 decimal place, e.g. 1.5.) Alternative 1 Alternative 2 The controllable margin The expected return on investment

Explanation / Answer

a Sales 586400 Variable costs 351840 Contribution margin 234560 Controllable fixed costs 56200 Controllable margin 178360 Controllable margin = $178360 b Alternative I Sales 586400 Variable costs 351840 Contribution margin 234560 Controllable fixed costs 56200 Controllable margin 178360 Expected return on investment = 178360/(621300-123200)= 35.8% Alternative II Sales 692800 Variable costs 415680 Contribution margin 277120 Controllable fixed costs 56200 Controllable margin 220920 Expected return on investment = 220920/621300= 35.6%

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