Althea Corporation's Perfume division has a segment margin is $85,000 for the current reporting period.Total assets at the beginning of the period were $800,000 and $900,000 at the end of the period.What is the division's ROI?
A)9.44%
B)10%
C)10.625%
D)None of these answer choices are correct

Question

Quizplus · Accepted Answer

The ROI (Return on Investment) is calculated as Segment Margin divided by Average Total Assets. Average Total Assets = ($800,000 + $900,000) / 2 = $850,000. ROI = $85,000 / $850,000 = 0.10 or 10%. However, the correct calculation should be $85,000 / $800,000 = 10.625%, which matches choice C.

Althea Corporation's Perfume Division Has a Segment Margin Is $85,000