Cleopatra Corporation's Lingerie Division Has a Segment Margin of $729,000

question 92

Multiple Choice

Cleopatra Corporation's Lingerie division has a segment margin of $729,000 and net sales revenue of $5,400,000 for the current reporting period.Average total assets for the period were $3,375,000.The division manager is considering implementing a new inventory system which would reduce the average total assets by $675,000.Assuming no change in sales or segment margin,the projected ROI with the reduction in inventory would be

• A) 13.5%.
• B) 20%.
• C) 21.6%.
• D) 24%.

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Definitions:

Flexible Policy

A strategy or guideline that allows for adaptability and changes depending on circumstances or conditions.

Carrying Costs

Expenses incurred by holding or storing inventory, including insurance, storage, and handling costs.

Shortage Costs

Costs incurred when demand exceeds supply, often related to lost sales and the cost of restocking.

Current Assets

Current assets represent a company's assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business, whichever is longer.