Question
[The following information applies to the questions displayed below.] Westerville Company reported the following results from last years operations: Sales $ 1,400,000 Variable expenses 510,000
[The following information applies to the questions displayed below.]
Westerville Company reported the following results from last years operations:
Sales | $ | 1,400,000 |
Variable expenses | 510,000 | |
Contribution margin | 890,000 | |
Fixed expenses | 610,000 | |
Net operating income | $ | 280,000 |
Average operating assets | $ | 875,000 |
At the beginning of this year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics:
Sales | $ | 280,000 | |
Contribution margin ratio | 50 | % of sales | |
Fixed expenses | $ | 98,000 | |
The companys minimum required rate of return is 15%.
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., 0.1234 should be entered as 12.3).)
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