The Atlantic Division of Stark Productions Company Reported the Following

question 191

Essay

The Atlantic Division of Stark Productions Company reported the following results for 2016: $\begin{array}{lr}\text { Sales } & \$ 4,000,000 \\\text { Variable costs } & 3,200,000 \\\text { Controllable fixed costs } & 300,000 \\\text { Average operating assets } & 2,500,000\end{array}$ Management is considering the following independent alternative courses of action in 2017 in order to maximize the return on investment for the division.
1. Reduce controllable fixed costs by 10% with no change in sales or variable costs.
2. Reduce average operating assets by 10% with no change in controllable margin.
3. Increase sales $500000 with no change in the contribution margin percentage.
Instructions
(a) Compute the return on investment for 2016.
(b) Compute the expected return on investment for each of the alternative courses of action.

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Definitions:

Direct Order Plan

A communication approach that starts with the main point or request, followed by supporting details.

Routine Information

Regularly occurring data or facts which are typically procedural or administrative in nature.

Direct Order Plan

An organizational structure for messages that starts with the main idea or conclusion, followed by supporting details.

Organizing Information

Organizing information involves systematically arranging data or details in a structured manner to improve accessibility, understanding, or utilization.