Question

Marigold Corp. recorded operating data for its auto accessories division for the year. Sales $610000 Contribution margin 140000 Total direct fixed costs 90000 Average total operating assets 200000 How much is ROI for the year if management is able to identify a way to improve the contribution margin by $10000, assuming fixed costs are held constant? 75% 30% 25% 15%

Answer 1

Answer:

The ROI is 30%

Explanation:

New contribution margin = old contribution margin + increase

                                               = 140.000 + 10.000

                                               = 150.000

Net Income = contribution margin – total fixed expense

                               = 150.000 -90.000

                               = 60.000

ROI= Net income/ average operating assets

               = 60.000/200.000

               =30%