An Investment Center Generated a Contribution Margin of $400000 Fixed

question 6

Multiple Choice

An investment center generated a contribution margin of $400000 fixed costs of $200000 and sales of $2000000. The center's average operating assets were $800000. How much is the return on investment?

• A) 25%
• B) 175%
• C) 50%
• D) 75%

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Definitions:

Variable Cost

Expenses in a business that change in proportion with the volume of production or sales, such as materials and labor costs.

Total Cost

Total Cost is the complete cost of production, including both fixed and variable costs.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, showing how fixed costs per unit change with output levels.

Marginal Cost

The cost of producing one additional unit of a good or service, considering the variable costs involved.