Question

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

Bramble Corp. recorded operating data for its auto accessories division for the year. Sales $790000 Contribution margin 260000 Total 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? 116% 11% 80% 68%

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Answer #1

Actual contribution given in question is $260,000.

But while calculating ROI contribution is taken as $290,000, beacuse in the question it is indicate that the company can increase its contribution by $30,000.

So, the final contribution is = 260,000+30,000

=290,000

ROI=(Contribution-Fixed costs)/Assets

=(290,000-90,000)/250,000

=200,000/250,000

=80%.

Thanks

  

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