Westerville Company reported the following results from last year’s operations: Sales $ 1,400,000 Variable expenses 510,000 Contribution margin 890,000 Fixed expenses 610,000 Net operating income $ 280,000 Average operating assets $ 875,000 At the beginning of this year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics: Sales $ 280,000 Contribution margin ratio 50 % of sales Fixed expenses $ 98,000 The company’s minimum required rate of return is 15%. Foundational 11-7 (Algo) 7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))
Westerville Company reported the following results from last year’s operations: Sales $ 1,400,000 Variable expenses 510,000 Contribution margin 890,000 Fixed expenses 610,000 Net operating income $ 280,000 Average operating assets $ 875,000 At the beginning of this year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics: Sales $ 280,000 Contribution margin ratio 50 % of sales Fixed expenses $ 98,000 The company’s minimum required rate of return is 15%. Foundational 11-7 (Algo) 7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The Foundational 15 (Algo) [LO11-1, LO11-2]
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Westerville Company reported the following results from last year’s operations:
| Sales | $ | 1,400,000 |
| Variable expenses | 510,000 | |
| Contribution margin | 890,000 | |
| Fixed expenses | 610,000 | |
| Net operating income | $ | 280,000 |
| Average operating assets | $ | 875,000 |
At the beginning of this year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ | 280,000 | |
| Contribution margin ratio | 50 | % of sales | |
| Fixed expenses | $ | 98,000 | |
The company’s minimum required
Foundational 11-7 (Algo)
7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e .1234 should be entered as 12.3))
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