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Alex
3 years ago
10

Bramble Corp. recorded operating data for its auto accessories division for the year. Sales $790000 Contribution margin 260000 T

otal direct fixed costs 90000 Average total operating assets 250000 How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30000, assuming fixed costs are held constant?
Business
1 answer:
Andrei [34K]3 years ago
3 0

Answer:

80%

Explanation:

For computing the return on investment first we have to need the following calculations

New contribution margin = Old contribution margin + increase  in contribution margin

= $260,000 + $30,000

= $290,000

And,

Net Income = Contribution margin - Total direct fixed costs

= $290,000 - $90,000

= $200,000

ROI = Net income ÷  average operating assets

= $200,000 ÷ $250,000

= 80%

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It will be better to produce all the units of Plain we can sell, then use any remaining machine hours to produce Fancy. This is because Plain, generated more contribution per hour than Fancy.

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We have to calculate the Contribution Margin per machine hours

This means check which product makes a better use of the scarse resourse

\frac{Plain\: CM}{Plain \: Machine \: Hours } = CM \: per \:Machine\:Hour\\\\ 80 \div 2 = 40

\frac{Fancy\: CM}{Fancy\: Machine \: Hours } = CM \: per \:Machine\:Hour\\\\ 93 \div 3 = 31

It will be better to produce all the units of Plain we can sell, then use any remaining machine hours to produce Fancy

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When the discounted cash flow method is used to determine the appropriate value of a security, it is vital to buy the security when the current market price is below the present value.

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Assume Maine Line Railway is considering hiring a reservations agency to handle passenger reservations. The agency would charge
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The analytic technique utilized after an adverse event occurs to prevent its recurrence is called Root cause analysis.

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