Question
[The following information applies to the questions displayed below.] Westerville Company reported the following results from last years operations: Sales $ 2,200,000 Variable expenses 660,000
[The following information applies to the questions displayed below.]
Westerville Company reported the following results from last years operations:
Sales | $ | 2,200,000 |
Variable expenses | 660,000 | |
Contribution margin | 1,540,000 | |
Fixed expenses | 1,100,000 | |
Net operating income | $ | 440,000 |
Average operating assets | $ | 1,375,000 |
At the beginning of this year, the company has a $275,000 investment opportunity with the following cost and revenue characteristics:
Sales | $ | 440,000 | |
Contribution margin ratio | 60 | % of sales | |
Fixed expenses | $ | 220,000 | |
The companys minimum required rate of return is 15%.
Required:
1. What is last years margin?
3. What is last years return on investment (ROI)? (Round your intermediate calculations to 1 decimal place.)
4. What is the margin related to this years investment opportunity?
5. What is the turnover related to this years investment opportunity? (Round your answer to 1 decimal place.)
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