Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l }
\text { Revenues } & \$ 400,000 \
\text { Operating expenses } & \$ 360,000 \
\text { Operating income } & \$ 40,000 \
\text { Operating assets } & \$ 500,000
\end{array}$$
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that 60% of the Furniture Division's operating expenses are variable. To what level would revenues have to increase to achieve the desired 12% ROI? Assume that the amount of operating assets will continue to be $500,000.

Question

Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l } 
\text { Revenues } & \$ 400,000 \
\text { Operating expenses } & \$ 360,000 \
\text { Operating income } & \$ 40,000 \
\text { Operating assets } & \$ 500,000
\end{array}$$ 
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that 60% of the Furniture Division's operating expenses are variable. To what level would revenues have to increase to achieve the desired 12% ROI? Assume that the amount of operating assets will continue to be $500,000.

Quizplus · Accepted Answer

The Answer of Use the following information to answer Question. The Furniture Division of Waverly Company reports the following results for 2012: $$\begin{array} { l l } 
\text { Revenues } & \$ 400,000 \
\text { Operating expenses } & \$ 360,000 \
\text { Operating income } & \$ 40,000 \
\text { Operating assets } & \$ 500,000
\end{array}$$ 
Waverly Company has set a target return on investment (ROI) of 12% for the Furniture Division.
Assume that 60% of the Furniture Division's operating expenses are variable. To what level would revenues have to increase to achieve the desired 12% ROI? Assume that the amount of operating assets will continue to be $500,000.

Use the Following Information to Answer Question Waverly Company Has Set a Target Return on Investment (ROI)