Westerville Company reported the following results from last year’s operations: Sales $ 1,800,000 Variable expenses 740,000 Contribution margin 1,060,000 Fixed expenses 700,000 Net operating income $ 360,000 Average operating assets $ 1,200,000 At the beginning of this year, the company has a $400,000 investment opportunity with the following cost and revenue characteristics: Sales $ 600,000 Contribution margin ratio 60 % of sales Fixed expenses $ 288,000 The company’s minimum required rate of return is 10%. Required: 1. What is last year’s margin?
Westerville Company reported the following results from last year’s operations: Sales $ 1,800,000 Variable expenses 740,000 Contribution margin 1,060,000 Fixed expenses 700,000 Net operating income $ 360,000 Average operating assets $ 1,200,000 At the beginning of this year, the company has a $400,000 investment opportunity with the following cost and revenue characteristics: Sales $ 600,000 Contribution margin ratio 60 % of sales Fixed expenses $ 288,000 The company’s minimum required rate of return is 10%. Required: 1. What is last year’s margin?
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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Question
Westerville Company reported the following results from last year’s operations:
| Sales | $ 1,800,000 |
|---|---|
| Variable expenses | 740,000 |
| Contribution margin | 1,060,000 |
| Fixed expenses | 700,000 |
| Net operating income | $ 360,000 |
| Average operating assets | $ 1,200,000 |
At the beginning of this year, the company has a $400,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ 600,000 | |
|---|---|---|
| Contribution margin ratio | 60 | % of sales |
| Fixed expenses | $ 288,000 |
The company’s minimum required
Required:
1. What is last year’s margin?
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