Westervilile Company reported the following results from last year's operations: Sales Variable expenses $1,000,000 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $200,000 Average operating assets $825,000 This year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $200,000 Contribution margin ratio 60% of sales Fixed expenses $90,000 The company's minimum required rate of return is 15%. Required: 1. What is last year?s margin? 2. What is last year?s turnover? 3. What is last year?s return on investment (ROI)? 4. What is the margin related to this year?s investment opportunity? 5. What is the turnover related to this year?s investment opportunity?

Westervilile Company reported the following results from last year's operations: Sales Variable expenses $1,000,000 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $200,000 Average operating assets $825,000 This year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $200,000 Contribution margin ratio 60% of sales Fixed expenses $90,000 The company's minimum required rate of return is 15%. Required: 1. What is last year?s margin? 2. What is last year?s turnover? 3. What is last year?s return on investment (ROI)? 4. What is the margin related to this year?s investment opportunity? 5. What is the turnover related to 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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