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Help calculating company's turnover
Westerville Company reported the following results from last years operations:
| | |
| Sales | $ | 1,750,000 |
| Variable expenses | | 520,000 |
| Contribution margin | | 1,230,000 |
| Fixed expenses | | 880,000 |
| Net operating income | $ | 350,000 |
| Average operating assets | $ | 875,000 |
| |
At the beginning of this year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics:
| | |
| Sales | $ | 320,000 | |
| Contribution margin ratio | | 60 | % of sales |
| Fixed expenses | $ | 128,000 | |
| |
The companys minimum required rate of return is 20%.
8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year?
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