Westerville Company reported the following results from last years operations: ...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Westerville Company reported the following results from last years operations:
Sales
$
1,200,000
Variable expenses
320,000
Contribution margin
880,000
Fixed expenses
640,000
Net operating income
$
240,000
Average operating assets
$
600,000
At the beginning of this year, the company has a $150,000 investment opportunity with the following cost and revenue characteristics:
Sales
$
240,000
Contribution margin ratio
50
% of sales
Fixed expenses
$
84,000
The companys minimum required rate of return is 15%.
Required:
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.)
6. What is the ROI related to this years investment opportunity?
7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
