EXERCISE 12-1 Compute the Return on Investment (RO LO 12-1 Alyeska Services Comp

Question

EXERCISE 12-1 Compute the Return on Investment (RO LO 12-1 Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska Data concerning the most recent year appear below Sales Contribution margin ratio ....c$200,000 60% of sales $90,000 Required: 1. Compute the margin for Alyeska Services Company 2. Compute the turnover tor Alyeska Services Company 3 Compute the return on investment (RO for Alyeska Services Company

Explanation / Answer

Sales 2,00,000$

Contribution margin. 60 of sales = 1,20,000$

Turnover is the sales revenue = 2,00,000$

Fixed expenses. 90,000$

Net Income= 30,000$(120,000- 90,000)

Return on investment is the net profit as a ratio of cost of investment. Here the sales are 2,00,000$ and the cost of these sales are 40 or 80,000$

So the ROI= 30,000/80,000*100= 37.5

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