Canedo Inc. reported the following results from last year\'s operations Sales Va

Question

Canedo Inc. reported the following results from last year's operations Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets $4,000,000 $9,600,000 7,170,000 2,430,000 1,470,000 $ 960,000 At the beginning of this year, the company has a $700,000 investment opportunity with the following characteristics: $2,310,000 Sales Contribution margin ratio Fixed expenses 60% of sales $1,201,200 If the company pursues the investment opportunity and otherwise performs the same as last year, the combined turnover for the entire company will be closest to

Explanation / Answer

Combined Sales = 9600000+2310000 = 11910000

Combined Assets = 4000000+700000 = 4700000

Turnover = Sales/Assets = 11910000/4700000 = 2.53

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