Question
Westerville Company reported the following results from last years operations: Sales $ 1,500,000 Variable expenses 500,000 Contribution margin 1,000,000 Fixed expenses 700,000 Net operating income
Westerville Company reported the following results from last years operations:
Sales | $ | 1,500,000 |
Variable expenses | 500,000 | |
Contribution margin | 1,000,000 | |
Fixed expenses | 700,000 | |
Net operating income | $ | 300,000 |
Average operating assets | $ | 1,000,000 |
|
This year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics:
Sales | $ | 300,000 | |
Contribution margin ratio | 60 | % of sales | |
Fixed expenses | $ | 132,000 | |
|
The companys minimum required rate of return is 10%.
1. What is last years margin?
2. What is last years turnover? (Round your answer to 1 decimal place.)
3. What is last years return on investment (ROI)?
4. What is the margin related to this years investment opportunity?
5. What is the turnover related to this years investment opportunity? (Round your answer to 1 decimal place.)
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