Question
Westerville Company reported the following results from last years operations: Sales $ 1,400,000 Variable expenses 720,000 ________________________________________ ________________________________________ Contribution margin 680,000 Fixed expenses 470,000 ________________________________________
Westerville Company reported the following results from last years operations: Sales $ 1,400,000 Variable expenses 720,000 ________________________________________ ________________________________________ Contribution margin 680,000 Fixed expenses 470,000 ________________________________________ ________________________________________ Net operating income $ 210,000 ________________________________________________________________________________ ________________________________________________________________________________ Average operating assets $ 875,000 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________ This year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics: Sales $ 560,000 Contribution margin ratio 70 % of sales Fixed expenses $ 336,000 ________________________________________ The companys minimum required rate of return is 15%.
5. What is the turnover related to this years investment opportunity? (Round your answer to 1 decimal place.) Turnover_________
6. What is the ROI related to this years investment opportunity? ROI______%
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 .1234 should be entered as 12.3)) Margin_______%
8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.) Turnover_______
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