Westerville Company reported the following results from last year’s operations:

Question

Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000 Variable expenses 730,000 Contribution margin 770,000 Fixed expenses 470,000 Net operating income $ 300,000 Average operating assets $ 937,500 This year, the company has a $362,500 investment opportunity with the following cost and revenue characteristics: Sales $ 580,000 Contribution margin ratio 70 % of sales Fixed expenses $ 319,000

2 What is last year’s turnover? (Round your answer to 1 decimal place.)

8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? (Round your answer to 2 decimal places.)

Explanation / Answer

Answer :- Last year turnover is $1500000

8. According to last year earn the profit is 300000/1500000*100= 20%

So Sales $ 580000

Less: Variable Cost 30% on sales = 174000

Contribution = 406000

Less:- Fixed Cost = 319000

Net Operating Income = 87000

Percentage in net oprating income = 87000/580000*100=15%

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