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Calculate the return on investment

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Reference no: EM132489412

The Burger Division of Good Meat Company reported the following results for 2020:

Sales                                 $800,000

Variable costs                    420,000

Controllable fixed costs           100,000

Average operating assets        4,000,000

Management is considering the following independent alternative courses of action in 2021 in order to maximize the return on investment for the division.

1. Reduce controllable fixed costs by 50% with no change in sales or variable costs.

2. Reduce average operating assets by 30% with no change in controllable margin.

3. Increase sales $200,000 with no change in the contribution margin percentage.

Required

Question a) Calculate the return on investment for 2020

Question b) Calculate the expected return on investment for each of the alternative courses of action.

Reference no: EM132489412

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