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| Westerville Company reported the following results from last years operations: |
| | |
| Sales | $ | 2,200,000 |
| Variable expenses | | 660,000 |
| | | |
| Contribution margin | | 1,540,000 |
| Fixed expenses | | 1,100,000 |
| | | |
| Net operating income | $ | 440,000 |
| | | |
| Average operating assets | $ | 1,375,000 |
| | | |
| |
| This year, the company has a $275,000 investment opportunity with the following cost and revenue characteristics: |
| | |
| Sales | $ | 440,000 | |
| Contribution margin ratio | | 60 | % of sales |
| Fixed expenses | $ | 220,000 | |
| |
| |
| The companys minimum required rate of return is 15%. |
| |
rev: 04_28_2016_QC_CS-49731
1.
value: 0.50 points
Required information
| 1. | What is last years margin? |
| | |
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
2.
value: 0.50 points
Required information
| 2. | What is last years turnover? (Round your answer to 1 decimal place.) |
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
3.
value: 0.50 points
Required information
| 3. | What is last years return on investment (ROI)? |
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
4.
value: 0.50 points
Required information
| 4. | What is the margin related to this years investment opportunity? |
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
5.
value: 0.50 points
Required information
| 5. | What is the turnover related to this years investment opportunity? (Round your answer to 1 decimal place.) |
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
6.
value: 0.50 points
Required information
| 6. | What is the ROI related to this years investment opportunity? |
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
7.
value: 0.50 points
Required information
| 11. | What is last years residual income? |
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
8.
value: 0.50 points
Required information
| 12. | What is the residual income of this years investment opportunity? |
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 Medium
Answer & Explanation
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