Foundational LO11 1, LO11 2 The following information applies to the questions displayed below Westerville Company reported the following results from last years operations Sales $ 1,200,000 Variable expenses 420,000 Contribution margin 780,000 Fixed expenses 600,000 Net operating income $ 180,000 Average operating assets $ 600,000 This year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics Sales $ 220,000 Contribution margin ratio 60 of sales Fixed expenses $ 99,000 The companys minimum required rate of return is 20 References Section Break Foundational LO11 1, LO11 2 1 value 0 20 points Required information Foundational 11 1 Required 1 What is last years margin References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 1 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 2 value 0 20 points Required information Foundational 11 2 2 What is last years turnover (Round your answer to 1 decimal place ) References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 2 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 3 value 0 20 points Required information Foundational 11 3 3 What is last years return on investment (ROI) References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 3 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 4 value 0 20 points Required information Foundational 11 4 4 What is the margin related to this years investment opportunity References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 4 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 5 value 0 20 points Required information Foundational 11 5 5 What is the turnover related to this years investment opportunity (Round your answer to 1 decimal place ) References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 5 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 6 value 0 20 points Required information Foundational 11 6 6 What is the ROI related to this years investment opportunity References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 6 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 7 value 0 20 points Required information Foundational 11 7 7 If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year (Round your percentage answer to 1 decimal place (i e 1234 should be entered as 12 3)) References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 7 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 8 value 0 20 points Required information Foundational 11 8 8 If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year (Round your answer to 2 decimal places ) References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 8 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 9 value 0 20 points Required information Foundational 11 9 9 If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year (Round your percentage answer to 1 decimal place (i e , 0 1234 should be considered as 12 3 )) Garrison 15e Recheck 2014 12 29 References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 9 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 10 value 0 20 points Required information Foundational 11 10 10 a If Westervilles chief executive officer will earn a bonus only if her ROI from this year exceeds her ROI from last year, would she pursue the investment opportunity Yes No 10 b Would the owners of the company want her to pursue the investment opportunity Yes No References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 10 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 11 value 0 20 points Required information Foundational 11 11 11 What is last years residual income References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 11 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 12 value 0 20 points Required information Foundational 11 12 12 What is the residual income of this years investment opportunity References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 12 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 13 value 0 20 points Required information Foundational 11 13 13 If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 13 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 14 value 0 20 points Required information Foundational 11 14 14 If Westervilles chief executive officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity No Yes References eBook Resources Worksheet Difficulty 2 MediumLearning Objective 11 02 Compute residual income and understand its strengths and weaknesses Foundational 11 14 Learning Objective 11 01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI Check my work 15 value 0 20 points Required information Foundational 11 15 15 a Assume that the contribution margin ratio of the investment opportunity was 50 instead of 60 If Westervilles Chief Executive Officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity Yes No 15 b Would the owners of the company want her to pursue the investment opportunity No Yes

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Foundational [LO11-1, LO11-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last years operations: Sales $ 1,200,000

Foundational [LO11-1, LO11-2]

[The following information applies to the questions displayed below.]

Westerville Company reported the following results from last years operations:


Sales	$	1,200,000
Variable expenses		420,000

Contribution margin		780,000
Fixed expenses		600,000

Net operating income	$	180,000

Average operating assets	$	600,000

This year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics:


Sales	$	220,000
Contribution margin ratio		60	% of sales
Fixed expenses	$	99,000

The companys minimum required rate of return is 20%.

References

Section BreakFoundational [LO11-1, LO11-2]

value: 0.20 points

Required information

Foundational 11-1

Required:

1.	What is last years margin?

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-1Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

value: 0.20 points

Required information

Foundational 11-2

2.	What is last years turnover? (Round your answer to 1 decimal place.)

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-2Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

value: 0.20 points

Required information

Foundational 11-3

3.	What is last years return on investment (ROI)?

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-3Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

value: 0.20 points

Required information

Foundational 11-4

4.	What is the margin related to this years investment opportunity?

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-4Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

value: 0.20 points

Required information

Foundational 11-5

5.	What is the turnover related to this years investment opportunity? (Round your answer to 1 decimal place.)

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-5Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

value: 0.20 points

Required information

Foundational 11-6

6.	What is the ROI related to this years investment opportunity?

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-6Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

value: 0.20 points

Required information

Foundational 11-7

7.	If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-7Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

value: 0.20 points

Required information

Foundational 11-8

8.	If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-8Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

value: 0.20 points

Required information

Foundational 11-9

9.	If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%.))

Garrison 15e Recheck 2014-12-29

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-9Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

10.

value: 0.20 points

Required information

Foundational 11-10

10-a.

If Westervilles chief executive officer will earn a bonus only if her ROI from this year exceeds her ROI from last year, would she pursue the investment opportunity?

	Yes
	No

10-b.

Would the owners of the company want her to pursue the investment opportunity?

	Yes
	No

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-10Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

11.

value: 0.20 points

Required information

Foundational 11-11

11.	What is last years residual income?

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-11Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

12.

value: 0.20 points

Required information

Foundational 11-12

12.	What is the residual income of this years investment opportunity?

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-12Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

13.

value: 0.20 points

Required information

Foundational 11-13

13.	If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year?

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-13Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

14.

value: 0.20 points

Required information

Foundational 11-14

14.

If Westervilles chief executive officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity?

	No
	Yes

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 11-02 Compute residual income and understand its strengths and weaknesses.

Foundational 11-14Learning Objective: 11-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.

Check my work

15.

value: 0.20 points

Required information

Foundational 11-15

15-a.

Assume that the contribution margin ratio of the investment opportunity was 50% instead of 60%. If Westervilles Chief Executive Officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity?