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The service division of Metro Industries reported the following results for 2014. Sales $500,000 Variable...

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Accounting

  1. The service division of Metro Industries reported the following results for 2014.

    Sales $500,000

    Variable costs 320,000

    Controllable fixed costs 40,800

    Average operating assets 280,000

    Management is considering the following course of action in 2015 in order to maximize the return on investment.

    1. Reduce average operating assets by $80,000, with no change in controllable margin.

    Compute controllable margin and the expected return on investment for 2015.

    Controllable margin is $180,000; expected return on investment for 2015 is 20.4%

    Controllable margin is $180,000; expected return on investment for 2015 is 49.7%.

    Controllable margin is $40,800; expected return on investment for 2015 is 20.4%.

    Controllable margin is $139,200; expected return on investment for 2015 is 69.6%

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