Question
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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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