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Robichau Incorporated reported the following results from last years operations: Sales...

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Accounting

Robichau Incorporated reported the following results from last years operations:

Sales $ 6,300,000
Variable expenses 4,930,000
Contribution margin 1,370,000
Fixed expenses 803,000
Net operating income $ 567,000
Average operating assets $ 3,000,000

At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics:

Sales $ 1,530,000
Contribution margin ratio 30 % of sales
Fixed expenses $ 306,000

The companys minimum required rate of return is 20%.

If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:

Multiple Choice

$776,100

($17,100)

$720,000

($60,000)

Answer & Explanation Solved by verified expert
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