cornerstones 3rd eddition by Hansen, Don R #3 The records for the Venusian Divis

Question

cornerstones 3rd eddition by Hansen, Don R

#3

The records for the Venusian Division show the following data:

Asset base                    $500,000

Sales Revenues            $725,000

Expenses                       $662,500

Required:

a. what is the margin, turnover, and ROI for Venusian Division?

b. Venusian has an option to make an additional investment that would add $100,000 to the asset base. It would generated an additional $50,000 in sales revenue and no additional expenses. What would be the effect on margin, turnover, and ROI?.

c. Another alternative (independent of alternative 'b') for Venusian is to run an advertising campaign that would require additional advertsising expenses of $37,500, but the best estimate is the campaign would generate an additional $75,000 of revenue. What would be the effect on margin, turnover, and ROI?

Explanation / Answer

Sales 725000 Expense 662500 Margin 62500 Turnover 662500 ROI 12.5 (62500/500000)*100 Sales 775000 Expense 662500 Margin 112500 Turnover 775000 ROI 18.75 Sales 725000 Expense 700000 Margin 25000 Turnover 725000 ROI 5

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