Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $ 1,600,000 700,000 900,000 660,000 $ 240,000 $ 1,000,000 At the beginning of this year, the company has a $325,000 investment opportunity with the following cost and revenue characteristics: Sales $520,000 Contribution margin ratio 70 % of sales $ 312,000 Fixed expenses The company's minimum required rate of return is 15%. 7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? Note: Round your percentage answer to 1 decimal place. Margin %

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
$ 1,600,000
700,000
900,000
660,000
$ 240,000
Average operating assets
$ 1,000,000
At the beginning of this year, the company has a $325,000 investment opportunity with the following cost and
revenue characteristics:
Sales
Contribution margin ratio
Fixed expenses
$520,000
70 % of sales
$ 312,000
The company's minimum required rate of return is 15%.
7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year?
Note: Round your percentage answer to 1 decimal place.
Margin
%
Transcribed Image Text:Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 1,600,000 700,000 900,000 660,000 $ 240,000 Average operating assets $ 1,000,000 At the beginning of this year, the company has a $325,000 investment opportunity with the following cost and revenue characteristics: Sales Contribution margin ratio Fixed expenses $520,000 70 % of sales $ 312,000 The company's minimum required rate of return is 15%. 7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? Note: Round your percentage answer to 1 decimal place. Margin %
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