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How to compute the controllable margin

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Reference no: EM132559123

The service division of Retro Industries reported the following results for 2010.

Sales $500,000

Variable costs 300,000

Controllable fixed costs 75,000

Average operating assets 450,000

Management is considering the following independent courses of action in 2011 in order to maximize the return on investment for this division.

1. Reduce average operating assets by $50,000, with no change in controllable margin.

2. Increase sales $100,000, with no change in the contribution margin percentage.

Question (a) Compute the controllable margin and the return on investment for 2010.

Reference no: EM132559123

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