The following information applies to the questions displayed below Westerville C

Question

The following information applies to the questions displayed below Westerville Company reported the following results from last year's operations: Sales Varlable expenses Contribution margin Flxed expenses Net operating Income $ 1400,000 680,000 720,000 $280,000 Average operating assets $ 875,000 This year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics: $480,000 Sales Contribution margin ratio Fixed expenses 80% of sales $336,000 The company's minimum required rate of return is 15%.

Explanation / Answer

5) Turnover = Sales/Operating assets

= 480000/300000

Turnover = 1.6 Times

6) Net income = 480000-80%-336000 = 48000

ROI = 48000*100/300000 = 16%

7) New income = 280000+48000 = 328000

Sales = 1400000+480000 = 1880000

Margin = 328000*100/1880000 = 17.4%

8) Turnover = 1880000/1175000 = 1.60 Times

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