Suppan Manufacturing Company manufactures a variety of tools and industrial equipment. The company operates through three divisions. Each division is an investment center. Operating data for the Home Division for the year ended December 31, 2012, and relevant budget data are as follows.
|
|
Actual
|
|
Comparison with Budget
|
| Sales |
|
$1,500,690 |
|
$100,140 |
favorable |
| Variable cost of goods sold |
|
693,690 |
|
60,290 |
unfavorable |
| Variable selling and administrative expenses |
|
124,550 |
|
24,250 |
unfavorable |
| Controllable fixed cost of goods sold |
|
169,540 |
|
On target |
|
| Controllable fixed selling and administrative expenses |
|
79,340 |
|
On target |
|
Average operating assets for the year for the Home Division were $2,500,190 which was also the budgeted amount.
Compute the expected ROI in 2013 for the Home Division, assuming the following independent changes to actual data. (Round ROI to 1 decimal place, e.g. 1.5.)
|
|
|
|
The expected ROI
|
| (1) |
|
Variable cost of goods sold is decreased by 7%. |
|
|
% |
| (2) |
|
Average operating assets are decreased by 11%. |
|
|
% |
| (3) |
|
Sales are increased by $200,800, and this increase is expected to increase contribution margin by $90,480. |
|
|
% |