Westerville Company reported the following results from lastyearâs operations:
Sales $ 1,300,000
Variable expenses 440,000
Contribution margin 860,000
Fixed expenses 600,000
Net operating income $ 260,000
Average operating assets $ 812,500
This year, the company has a $162,500 investment opportunitywith the following cost and revenue characteristics:
Sales $ 260,000 Contribution margin ratio 80 % of sales
Fixed expenses $ 182,000
The companyâs minimum required rate of return is 15%.
1.If the company pursues the investment opportunity andotherwise performs the same as last year, what margin will it earnthis year? (Round your percentage answer to 1 decimal place(i.e .1234 should be entered as 12.3))Margin______________%
2.If the company pursues the investment opportunity andotherwise performs the same as last year, what turnover will itearn this year? (Round your answer to 2 decimal places.)Turnover_________
Westerville Company reported the following results from lastyearâs operations:
Sales $ 1,300,000
Variable expenses 440,000
Contribution margin 860,000
Fixed expenses 600,000
Net operating income $ 260,000
Average operating assets $ 812,500
This year, the company has a $162,500 investment opportunitywith the following cost and revenue characteristics:
Sales $ 260,000 Contribution margin ratio 80 % of sales
Fixed expenses $ 182,000
The companyâs minimum required rate of return is 15%.
| 1.If the company pursues the investment opportunity andotherwise performs the same as last year, what margin will it earnthis year? (Round your percentage answer to 1 decimal place(i.e .1234 should be entered as 12.3))Margin______________%
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Related questions
[The following information applies to the questionsdisplayed below.]
Westerville Company reported the following results from lastyearâs operations: |
| Sales | $ | 1,400,000 |
| Variableexpenses | 720,000 | |
| Contributionmargin | 680,000 | |
| Fixed expenses | 470,000 | |
| Net operatingincome | $ | 210,000 |
| Average operatingassets | $ | 875,000 |
This year, the company has a $350,000 investment opportunitywith the following cost and revenue characteristics: |
| Sales | $ | 560,000 | |
| Contribution marginratio | 70 | % of sales | |
| Fixed expenses | $ | 336,000 | |
| The companyâs minimum required rate of return is 15%.
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Westerville Company reported the following results from lastyearâs operations: Sales $ 1,500,000 Variable expenses 530,000Contribution margin 970,000 Fixed expenses 670,000 Net operatingincome $ 300,000 Average operating assets $ 937,500 This year, thecompany has a $212,500 investment opportunity with the followingcost and revenue characteristics: Sales $ 340,000 Contributionmargin ratio 70 % of sales Fixed expenses $ 187,000 The companyâsminimum required rate of return is 10%.
The question is
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Westerville Company reported the following results from lastyearâs operations:
| Sales | $ | 1,400,000 |
| Variable expenses | 510,000 | |
| Contribution margin | 890,000 | |
| Fixed expenses | 610,000 | |
| Netoperating income | $ | 280,000 |
| Average operating assets | $ | 875,000 |
This year the company has a $175,000 investment opportunity withthe following cost and revenue characteristics: |
| Sales | $ | 280,000 | |
| Contribution margin ratio | 50 | % of sales | |
| Fixed expenses | $ | 98,000 | |
| The companyâsminimum required rate of return is 15%. |
| Required: |
| A. |
| If the company pursues the investment opportunity and otherwiseperforms the same as last year, what turnover will it earn thisyear? (Round your answer to 2 decimal places.) B. If the company pursues the investment opportunity and otherwiseperforms the same as last year, what Margin will it earn this year?(Round your answer to 2 decimal places.) |
| Turnover Margin |
