ABC Corporation has 3 plants across the United States in 3 different regions consisting of East, Central, and West. Last year, each plant purchased new equipment for their plants, and each plant earns the same income of $200,000. However, each plant required a different investment in assets as follow:
Plant
Investment Amount
East
$2,000,000
Central
$2,500,000
West
$1,600,000
Based on the data given, address the following tasks:
1. Discuss the result and the performance of each plant based on the income alone.
2. Compute and provide the return on investment (ROI) for each plant. Discuss the purpose of this calculation, and provide specific interpretation/evaluation of results (e.g., which plant is doing better/worse, which plant is using equipment more efficiently, etc.).
3. Identify the importance of responsibility accounting in leadership.
4. Propose specific solutions to the plant managers on how to control costs and improve revenue. Please be sure to be specific with the recommendations.
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