Westerville Company reported the following results from last years operations Sales $ 1,400,000 Variable expenses 680,000 Contribution margin 720,000 Fixed expenses 440,000 Net operating income $ 280,000 Average operating assets $ 875,000 This year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics Sales $ 480,000 Contribution margin ratio 80 of sales Fixed expenses $ 336,000 The companys minimum required rate of return is 15 References Section Break Foundational LO11 1, LO11 2 1 value 0 66 points Required information Foundational 11 1 Required 1 What is last years margin References eBook Resources Worksheet Foundational 11 1 Check my work 2 value 0 66 points Required information Foundational 11 2 2 What is last years turnover (Round your answer to 1 decimal place ) References eBook Resources Worksheet Foundational 11 2 Check my work 3 value 0 66 points Required information Foundational 11 3 3 What is last years return on investment (ROI) References eBook Resources Worksheet Foundational 11 3 Check my work 4 value 0 66 points Required information Foundational 11 4 4 What is the margin related to this years investment opportunity References eBook Resources Worksheet Foundational 11 4 Check my work 5 value 0 66 points Required information Foundational 11 5 5 What is the turnover related to this years investment opportunity (Round your answer to 1 decimal place ) References eBook Resources Worksheet Foundational 11 5 Check my work 6 value 0 66 points Required information Foundational 11 6 6 What is the ROI related to this years investment opportunity References eBook Resources Worksheet Foundational 11 6 Check my work 7 value 0 66 points Required information Foundational 11 7 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)) References eBook Resources Worksheet Foundational 11 7 Check my work 8 value 0 66 points Required information Foundational 11 8 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 ) References eBook Resources Worksheet Foundational 11 8 Check my work 9 value 0 66 points Required information Foundational 11 9 9 If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year (Round your percentage answer to 1 decimal place (i e , 0 1234 should be considered as 12 3 )) Garrison 15e Recheck 2014 12 29 References eBook Resources Worksheet Foundational 11 9 Check my work 10 value 0 66 points Required information Foundational 11 10 10 a If Westervilles chief executive officer will earn a bonus only if her ROI from this year exceeds her ROI from last year, would she pursue the investment opportunity Yes No 10 b Would the owners of the company want her to pursue the investment opportunity Yes No References eBook Resources Worksheet Foundational 11 10 Check my work 11 value 0 66 points Required information Foundational 11 11 11 What is last years residual income References eBook Resources Worksheet Foundational 11 11 Check my work 12 value 0 66 points Required information Foundational 11 12 12 What is the residual income of this years investment opportunity References eBook Resources Worksheet Foundational 11 12 Check my work 13 value 0 66 points Required information Foundational 11 13 13 If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year References eBook Resources Worksheet Foundational 11 13 Check my work 14 value 0 66 points Required information Foundational 11 14 14 If Westervilles chief executive officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity No Yes References eBook Resources Worksheet Foundational 11 14 Check my work 15 value 0 76 points Required information Foundational 11 15 15 a Assume that the contribution margin ratio of the investment opportunity was 75 instead of 80 If Westervilles Chief Executive Officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity No Yes 15 b Would the owners of the company want her to pursue the investment opportunity Yes No

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Westerville Company reported the following results from last years operations: Sales $ 1,400,000 Variable expenses 680,000 Contribution margin 720,000 Fixed expenses 440,000 Net operating income

Westerville Company reported the following results from last years operations:


Sales	$	1,400,000
Variable expenses		680,000

Contribution margin		720,000
Fixed expenses		440,000

Net operating income	$	280,000

Average operating assets	$	875,000

This year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics:


Sales	$	480,000
Contribution margin ratio		80	% of sales
Fixed expenses	$	336,000

The companys minimum required rate of return is 15%.

References

Section BreakFoundational [LO11-1, LO11-2]

value: 0.66 points

Required information

Foundational 11-1

Required:

1.	What is last years margin?

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WorksheetFoundational 11-1

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value: 0.66 points

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Foundational 11-2

2.	What is last years turnover? (Round your answer to 1 decimal place.)

References

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WorksheetFoundational 11-2

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value: 0.66 points

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Foundational 11-3

3.	What is last years return on investment (ROI)?

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WorksheetFoundational 11-3

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value: 0.66 points

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Foundational 11-4

4.	What is the margin related to this years investment opportunity?

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value: 0.66 points

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Foundational 11-5

5.	What is the turnover related to this years investment opportunity? (Round your answer to 1 decimal place.)

References

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WorksheetFoundational 11-5

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value: 0.66 points

Required information

Foundational 11-6

6.	What is the ROI related to this years investment opportunity?

References

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WorksheetFoundational 11-6

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value: 0.66 points

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Foundational 11-7

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))

References

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WorksheetFoundational 11-7

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value: 0.66 points

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Foundational 11-8

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.)

References

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value: 0.66 points

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Foundational 11-9

9.	If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%.))

Garrison 15e Recheck 2014-12-29

References

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WorksheetFoundational 11-9

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10.

value: 0.66 points

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Foundational 11-10

10-a.

If Westervilles chief executive officer will earn a bonus only if her ROI from this year exceeds her ROI from last year, would she pursue the investment opportunity?

	Yes
	No

10-b.

Would the owners of the company want her to pursue the investment opportunity?

	Yes
	No

References

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WorksheetFoundational 11-10

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11.

value: 0.66 points

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Foundational 11-11

11.	What is last years residual income?

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12.

value: 0.66 points

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Foundational 11-12

12.	What is the residual income of this years investment opportunity?

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13.

value: 0.66 points

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Foundational 11-13

13.	If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year?

References

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WorksheetFoundational 11-13

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14.

value: 0.66 points

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Foundational 11-14

14.

If Westervilles chief executive officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity?

	No
	Yes

References

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WorksheetFoundational 11-14

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15.

value: 0.76 points

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Foundational 11-15

15-a.

Assume that the contribution margin ratio of the investment opportunity was 75% instead of 80%. If Westervilles Chief Executive Officer will earn a bonus only if her residual income from this year exceeds her residual income from last year, would she pursue the investment opportunity?