QUESTION: Westerville Company reported the following results from last year's operations: Sales Variable expenses $2,000,000 $640,000 Contribution margin $1,360,000 Fixed expenses $860,000 $500,000 Net operating income 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%. a. What is last year's turnover? (Round your answer to 1 decimal place.) b. What is the turnover related to this years? investment opportunity? (Round your answer to 1 decimal place.) c. What is the residual income of this year's investment opportunity?
QUESTION: Westerville Company reported the following results from last year's operations: Sales Variable expenses $2,000,000 $640,000 Contribution margin $1,360,000 Fixed expenses $860,000 $500,000 Net operating income 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%. a. What is last year's turnover? (Round your answer to 1 decimal place.) b. What is the turnover related to this years? investment opportunity? (Round your answer to 1 decimal place.) c. What is the residual income of this year's investment opportunity?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 27E: Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the...
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![QUESTION:
Westerville Company reported the following results from last year's
operations:
Sales
Variable expenses
$2,000,000
$640,000
Contribution margin
$1,360,000
Fixed expenses
$860,000
$500,000
Net operating income
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%.
a. What is last year's turnover? (Round your answer to 1 decimal place.)
b. What is the turnover related to this years? investment opportunity?
(Round your answer to 1 decimal place.)
c. What is the residual income of this year's investment opportunity?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F99519037-989b-4706-b176-6f0123219470%2Fd4ca39c8-2078-434b-a938-af1516fd735d%2Fzdil7s_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION:
Westerville Company reported the following results from last year's
operations:
Sales
Variable expenses
$2,000,000
$640,000
Contribution margin
$1,360,000
Fixed expenses
$860,000
$500,000
Net operating income
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%.
a. What is last year's turnover? (Round your answer to 1 decimal place.)
b. What is the turnover related to this years? investment opportunity?
(Round your answer to 1 decimal place.)
c. What is the residual income of this year's investment opportunity?
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