Naples, Inc.recorded operating data for its shoe division for the year. $$\begin{array} { l r }
\text { Sales } & \$ 750,000 \
\text { Contribution margin } & 135,000 \
\text { Total fixed costs } & 90,000 \
\text { Average total operating assets } & 300,000
\end{array}$$ How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30,000, assuming fixed costs are held constant?
A)25%
B)18%
C)45%
D)12%

Question

Naples, Inc.recorded operating data for its shoe division for the year. $$\begin{array} { l r } 
\text { Sales } & \$ 750,000 \
\text { Contribution margin } & 135,000 \
\text { Total fixed costs } & 90,000 \
\text { Average total operating assets } & 300,000
\end{array}$$ How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30,000, assuming fixed costs are held constant?
A)25%
B)18%
C)45%
D)12%

Quizplus · Accepted Answer

The ROI is calculated as (Net Operating Income / Average Operating Assets) * 100. The initial contribution margin is $135,000, and with an improvement of $30,000, it becomes $165,000. Subtracting fixed costs of $90,000 gives a net operating income of $75,000. Thus, ROI = ($75,000 / $300,000) * 100 = 25%.

Naples, Inc How Much Is ROI for the Year If Management Is