Beery Incorporated reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating incone Average operating assets $ 11,400,000 8,180,000 3,220,000 2,422,000 $ 798,000 $ 6,000,000 At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics: Sales Contribution margin ratio Fixed expenses $ 2,880,000 30% of sales $ 720,000 The company's minimum required rate of return is 12%. If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to: Multiple Choice $848,700

Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
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Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
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Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 27E: Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the...
Question
Beery Incorporated reported the following results from last year's operations:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating incone
Average operating assets
$ 11,400,000
8,180,000
3,220,000
2,422,000
$ 798,000
$ 6,000,000
At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics:
Sales
Contribution margin ratio
Fixed expenses
$ 2,880,000
30% of sales
$ 720,000
The company's minimum required rate of return is 12%. If the company pursues the investment opportunity, this year's combined residual income for the entire
company will be closest to:
Multiple Choice
$848,700
Transcribed Image Text:Beery Incorporated reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating incone Average operating assets $ 11,400,000 8,180,000 3,220,000 2,422,000 $ 798,000 $ 6,000,000 At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics: Sales Contribution margin ratio Fixed expenses $ 2,880,000 30% of sales $ 720,000 The company's minimum required rate of return is 12%. If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to: Multiple Choice $848,700
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