Reference no: EM132520453

                                        I                             II                             III

Sales                             $2,000,000         1,300,000           5,000,000

Controllable margin             $4,000,000         2,000,000          8,000,000

Average operating assets     $ 4,000,000       3,600,000            12,000,000

Data for the investment centers for Kaspar Company are given above. The centers expect the following changes in the next year:

(I) increase sales 15%;

(II) decrease costs $400,000;

(III) decrease average operating assets $500,000.

Question 1: Compute the expected return on investment (ROI) for each center. Assume center I has a contribution margin percentage of 70%.