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10 December, 16:39

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?

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  1. 10 December, 19:29
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    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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