Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Westerville Company reported the following results from last years operations: Sales $ 1,200,000 Variable expenses 420,000 Contribution margin 780,000 Fixed expenses 600,000 Net operating income

Westerville Company reported the following results from last years operations:

Sales $ 1,200,000
Variable expenses 420,000
Contribution margin 780,000
Fixed expenses 600,000
Net operating income $ 180,000
Average operating assets $ 600,000

At the beginning of this year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics:

Sales $ 220,000
Contribution margin ratio 60 % of sales
Fixed expenses $ 99,000

The companys minimum required rate of return is 20%.

Required:

1. What is last years margin?

2. What is last years turnover?

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?

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

IT Auditing And Sarbanes Oxley Compliance Key Strategies For Business Improvement

Authors: Dimitris N. Chorafas

1st Edition

036738650X, 978-0367386504

More Books

Students also viewed these Accounting questions

Question

2. Clearly identify time constraints.

Answered: 1 week ago