Margin, Turnover, ROI question?

Question

question 1

Margin X Asset Turnover= ROI

Sales=200,000

Avg operating assets=100,000

net operating income=20,000

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question 2: sell or process further:

A company discovers that it can change its product whizzo into bizzo! the company can sell unlimited quantities of both products:

Information

Selling price of whizzo 5.00

selling price of bizzo 7.50

Whizzo cost per unit: 3.00

additional cost to convert 2.00

A. Should the company change whizzo into bizzo? why?

B. What would be your answer if the company could sell only 500 units of whizzo or 370 units of bizzo?

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Answer 1

I don't know what's the question on Q1.

Q2 answer for A is YES. Because Bizzo provides higher CM/unit

Q2 B is NO because of the sales quantity different, the TOTAL CM for Whizzo is actually higher than Bizzo.

Cheers...