Griffin Corp. is evaluating its Piquette division an investment center. The division has a $60000 controllable margin and $400000 of sales. How much will Griffin's average operating assets be when its return on investment is 10%?
A) $600000
B) $660000
C) $400000
D) $340000

Question

Quizplus · Accepted Answer

The average operating assets will be $600,000 when the return on investment (ROI) is 10%. ROI is calculated as Controllable Margin / Average Operating Assets. Given a controllable margin of $60,000 and an ROI of 10%, we solve for Average Operating Assets: $60,000 / 0.10 = $600,000.