Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Westerville Company reported the following results from last year's operations:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Average operating assets
ROI
At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue
characteristics:
Sales
$ 480,000
$ 336,000
The company's minimum required rate of return is 15%.
$ 1,400,000
680,000
720,000
440,000
$ 280,000
$ 875,000
Contribution margin ratio
Fixed expenses
9. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Do
not round intermediate calculations. Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
37.3 %
80% of sales
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Transcribed Image Text:Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets ROI At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics: Sales $ 480,000 $ 336,000 The company's minimum required rate of return is 15%. $ 1,400,000 680,000 720,000 440,000 $ 280,000 $ 875,000 Contribution margin ratio Fixed expenses 9. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Do not round intermediate calculations. Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 37.3 % 80% of sales
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