Compare the margin and asset turnover for three divisions

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Reference no: EM133154964

Question - Return on investment - After seeing the results of the segment analysis for the Nylon Fibers division, James Cameron wants all three divisions focusing on the correct avenues for improving division performance. Refer to the table below and answer the following questions.


Polyesters Fibers Division

Rope Division

Nylon Fibers division

Total

Revenue

$10,600,000

$6,725,000

$8,650,000

$2,5975;000

Less variable cost





Cost of goods sold

5,543,000,

2,368,000

4,414,000

12,325,000

Selling and administrative

1334000

649000

890000

2873000

Contribution margin

3723000

3708000

3346000

10777000

Less traceable fixed expenses





Cost of goods sold

1685000

1382000

2208000

5275000

Selling and administrative

236000

174000

273000

683000

Segment margin

1802000

2152000

865000

4819000

Common fixed expenses




2886000

Net operating income




1933000

Required -

a. Calculate the margin and asset turnover for Centex Yarns' three divisions. Show that margin × asset turnover equals the return on investment for each division as reported in the text.

b. Compare the margin and asset turnover for the three divisions and make suggestions for increasing the return on investment of each division.

Reference no: EM133154964

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