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28 Sep 2019
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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
Please show all steps..thank you
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 |
Hubert KochLv2
28 Sep 2019