he following information applies to the questions displayed below.] Westerville
ID: 2430241 • Letter: H
Question
he following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations Sales Variable expenses 1,400,000 510,000 Contribution margin Fixed expenses 890,000 610,000 Net operating income 280,000 Average operating assets 875,000 This year, the company has a $175,000 investment opportunity with the following cost and revenue characteristics Sales Contribution margin ratio Fixed expenses 280,000 60 % of sales 98,000 The company's minimum required rate of return is 15%. Required: 1. What is last year's margin? 2. What is last year's turnover? (Round your answer to 1 decimal place.) 3. What is last year's return on investment (ROl)? 4. What is the margin related to this year's investment opportunity? 5. What is the turnover related to this year's investment opportunity? (Round your answer to 1 decimal place.) 6. What is the ROl related to this year's investment opportunity? 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 (ie 1234 should be entered as 12.3))Explanation / Answer
1)last year margin =sales - variable cost-fixed cost
=1400000-510000-610000=280000
2)last year turnover =1400000(sales)
3)ROI=Net operating income/Average assets=280000/875000
=.32or 32%
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