esterville Company reported the following results from last year’s operations: Sales $ 1,500,000 Variable expenses 500,000
esterville Company reported the following results from last year’s operations: Sales $ 1,500,000 Variable expenses 500,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Westerville Company reported the following results from last year’s operations:
| Sales | $ 1,500,000 |
|---|---|
| Variable expenses | 500,000 |
| Contribution margin | 1,000,000 |
| Fixed expenses | 700,000 |
| Net operating income | $ 300,000 |
| Average operating assets | $ 1,000,000 |
At the beginning of this year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ 300,000 | |
|---|---|---|
| Contribution margin ratio | 60 | % of sales |
| Fixed expenses | $ 132,000 |
The company’s minimum required
Required:
1. What is last year’s margin?
Expert Solution
Step 1
Margin represents the percentage income earned by the company on the sales. It is calculated by dividing the net operating income by the net sales.
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