(Answered) Problem - the service division of raney industries reported

Accounting

Problem - The service division of Raney Industries reported the following results for 2017.

Sales	$554,000
Variable costs	332,400
Controllable fixed costs	68,300
Average operating assets	625,200

Management is considering the following independent courses of action in 2018 in order to maximize the return on investment for this division.

1. Reduce average operating assets by $122,400, with no change in controllable margin.

2. Increase sales $105,700, with no change in the contribution margin percentage.

Compute the controllable margin and the return on investment for 2017.

Compute the controllable margin and the expected return on investment for each proposed alternative.

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