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Shrewsbury Inc. reported the following results from last years operations: Sales $ 7,200,000 Variable expenses 5,400,000 Contribution margin 1,800,000 Fixed expenses 1,296,000 Net operating income
Shrewsbury Inc. reported the following results from last years operations:
Sales | $ | 7,200,000 |
Variable expenses | 5,400,000 | |
Contribution margin | 1,800,000 | |
Fixed expenses | 1,296,000 | |
Net operating income | $ | 504,000 |
Average operating assets | $ | 4,000,000 |
At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics:
Sales | $ | 2,480,000 | |
Contribution margin ratio | 40 | % of sales | |
Fixed expenses | $ | 868,000 | |
The companys minimum required rate of return is 14%.
Last year's residual income was closest to:
Shrewsbury Inc. reported the following results from last year's operations: 20 Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $7,200, 000 5,400, 000 1,800, 000 1,296,000 $504, 000 $4,000,000 01:25:56 At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics: Sales Contribution margin ratio Fixed expenses $2,480,000 403 of sales $ 868,000 The company's minimum required rate of return is 14%. Last year's residual income was closest to Multiple Choice $504,000 ($56,000) $460,000 ($475,200)Step by Step Solution
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