[The following information applies to the questions displayed below.] Westervill
ID: 2463426 • Letter: #
Question
[The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 2,000,000 Variable expenses 640,000 Contribution margin 1,360,000 Fixed expenses 860,000 Net operating income $ 500,000 Average operating assets $ 1,250,000 This year, the company has a $250,000 investment opportunity with the following cost and revenue characteristics: Sales $ 400,000 Contribution margin ratio 70 % of sales Fixed expenses $ 220,000 The company’s minimum required rate of return is 10%.
What is the turnover related to this year’s investment opportunity? (Round your answer to 1 decimal place.)
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
6.
value:
0.50 points
Required information
What is the ROI related to this year’s investment opportunity?
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
7.
value:
0.50 points
Required information
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 MediumLearning Objective: 09-02 Compute residual income and understand its strengths and weaknesses.
Check my work
8.
value:
0.50 points
Required information
What is the residual income of this year’s investment opportunity?
References
eBook & Resources
WorksheetLearning Objective: 09-01 Compute return on investment (ROI) and show how changes in sales, expenses, and assets affect ROI.
Difficulty: 2 Medium
5.What is the turnover related to this year’s investment opportunity? (Round your answer to 1 decimal place.)
Explanation / Answer
answer 5. turnover related to investment opportunity: 400000
answer 6. return on investmnet opportunity: 60000/250000*100 = 24%
answer 7. last year residual income : 500000
answer 8. this year residual income of investment opportunity: 60000
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