Question
[The following information applies to the questions displayed below.] Westerville Company reported the following results from last years operations: Sales $ 2,300,000 Variable expenses 670,000
[The following information applies to the questions displayed below.]
Westerville Company reported the following results from last years operations: |
Sales | $ | 2,300,000 |
Variable expenses | 670,000 | |
Contribution margin | 1,630,000 | |
Fixed expenses | 1,170,000 | |
Net operating income | $ | 460,000 |
Average operating assets | $ | 1,437,500 |
This year, the company has a $287,500 investment opportunity with the following cost and revenue characteristics: |
Sales | $ | 460,000 | |
Contribution margin ratio | 50 | % of sales | |
Fixed expenses | $ | 161,000 | |
The companys minimum required rate of return is 15%.
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