Question
7-1 Westerville Company reported the following results from last years operations: Sales $ 1,500,000 Variable expenses 690,000 Contribution margin 810,000 Fixed expenses 435,000 Net operating
7-1
Westerville Company reported the following results from last years operations:
| Sales | $ | 1,500,000 |
| Variable expenses | 690,000 | |
| Contribution margin | 810,000 | |
| Fixed expenses | 435,000 | |
| Net operating income | $ | 375,000 |
| Average operating assets | $ | 1,250,000 |
At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ | 420,000 | |
| Contribution margin ratio | 70 | % of sales | |
| Fixed expenses | $ | 252,000 | |
The companys minimum required rate of return is 10%.
Required:
What is last years margin?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Frank Woods Business Accounting Volume 2
Authors: Frank Wood, Alan Sangster
13th Edition
1292085053, 9781292085050
