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Robichau Inc. reported the following results from last years operations: Sales $ 6,300,000 Variable expenses 4,930,000 Contribution margin 1,370,000 Fixed expenses 803,000 Net operating income
Robichau Inc. reported the following results from last years operations:
Sales | $ | 6,300,000 |
Variable expenses | 4,930,000 | |
Contribution margin | 1,370,000 | |
Fixed expenses | 803,000 | |
Net operating income | $ | 567,000 |
Average operating assets | $ | 3,000,000 |
At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics:
Sales | $ | 1,530,000 | |
Contribution margin ratio | 30 | % of sales | |
Fixed expenses | $ | 306,000 | |
The companys minimum required rate of return is 20%.
If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:
$780,000
$720,000
($60,000)
($56,100)
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