Answer:
D. 9.6 %
Explanation:
ROI is a financial ratio that communicates the how efficient business has been in generating profits using its capital.
The formula for ROI is Net profit/ investments x 100
For Tennil
Investments are $1,400,000
Net profits= sales - fixed cost + variable costs.
Sales: $4,480,000
Fixed costs: $1,657,600
variable costs ?
if contribution margin ration is 40% of sales
Contribution margin is 40/100 x 4,480,000= $1, 792,000
Contribution margin = sales- variable costs
$1, 792,000= $4480,000- variable costs
variable costs= $4,480,000- $1,792,000
variable costs = $2,688,000
Net profits = $4,480,000 - ($1,657,600+ $2,688,000)
Net profits =$134,400
ROI = $134,400/1,400,000 x 100
ROI = 0.096 x 100
ROI =9.6 %
