The Area Manager of the Steak House Restaurants Is Considering

question 126

Multiple Choice

The area manager of the Steak House Restaurants is considering two possible expansion alternatives.The required investments, expected controllable margins, and the ROIs of each are as follows: $$\begin{array} { l c c c } \underline{\text { Project }} &\underline{ \text { Investment }} &\underline{ \text { Controllable Margin }} &\underline{ \text { ROl }} \\\text { Winnipeg }& \$ 300,000 & \$ 100,000 & 33.33 \% \\\text { Regina } & \$ 700,000 & \$ 200,000 & 28.57 \%\end{array}$$
The Steak House segment has currently $5,000,000 in invested capital and a controllable margin of $1,500,000.Which one of following projects will increase the Steak House division's ROI?

• A)both the Winnipeg and Regina options
• B)only the Winnipeg option
• C)only the Regina option
• D)neither the Winnipeg nor the Regina options

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Definitions:

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