Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000 Variable expenses 690,000 Contribution margin 810,000 Fixed expenses 435,000 Net operating income $ 375,000 Average operating assets $ 1,250,000 At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics: Sales $ 420,000 Contribution margin ratio 70 % of sales Fixed expenses $ 252,000 The company’s minimum required rate of return is 10%. 1. What is the margin related to this year’s investment opportunity? 2. What is the turnover related to this year’s investment opportunity? 3. What is the ROI related to this year’s investment opportunity?
Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000 Variable expenses 690,000 Contribution margin 810,000 Fixed expenses 435,000 Net operating income $ 375,000 Average operating assets $ 1,250,000 At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics: Sales $ 420,000 Contribution margin ratio 70 % of sales Fixed expenses $ 252,000 The company’s minimum required rate of return is 10%. 1. What is the margin related to this year’s investment opportunity? 2. What is the turnover related to this year’s investment opportunity? 3. What is the ROI related to this year’s investment opportunity?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 11E
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Westerville Company reported the following results from last year’s operations:
| Sales | $ 1,500,000 |
|---|---|
| Variable expenses | 690,000 |
| Contribution margin | 810,000 |
| Fixed expenses | 435,000 |
| Net operating income | $ 375,000 |
| Average operating assets | $ 1,250,000 |
At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ 420,000 | |
|---|---|---|
| Contribution margin ratio | 70 | % of sales |
| Fixed expenses | $ 252,000 |
The company’s minimum required
1. What is the margin related to this year’s investment opportunity?
2. What is the turnover related to this year’s investment opportunity?
3. What is the
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