FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Westerville Company reported the following results from last year’s operations:
Sales | $ 1,500,000 |
---|---|
Variable expenses | 500,000 |
Contribution margin | 1,000,000 |
Fixed expenses | 700,000 |
Net operating income | $ 300,000 |
Average operating assets | $ 1,000,000 |
At the beginning of this year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics:
Sales | $ 300,000 | |
---|---|---|
Contribution margin ratio | 60 | % of sales |
Fixed expenses | $ 132,000 |
The company’s minimum required
What is the residual income of this year’s investment opportunity?
What is last year’s residual income?
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