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

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 4BE: Profit margin, investment turnover, and ROI Briggs Company has operating income of 36,000, invested...

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Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics: Sales Contribution margin ratio Fixed expenses Margin $ 1,400,000 680,000 720,000 440,000 $ 280,000 $ 875,000 $ 480,000 $ 336,000 The company's minimum required rate of return is 15%. 7. If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) % 80% of sales
Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets At the beginning of this year, the company has a $300,000 investment opportunity with the following cost and revenue characteristics: Sales Contribution margin ratio Fixed expenses $1,400,000 680,000 720,000 440,000 $ 280,000 $ 875,000 $ 480,000 $ 336,000 The company's minimum required rate of return is 15%. Residual income 80% of sales 13. If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year?
Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses Net operating income Average operating assets At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics: Sales Contribution margin ratio Fixed expenses $ 1,400,000 720,000 680,000 470,000 $ 210,000 $ 875,000 $ 560,000 $ 336,000 The company's minimum required rate of return is 15%. Turnover 70% of sales 5. What is the turnover related to this year's investment opportunity? (Round your answer to 1 decimal place.)
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 rate of return is 10%. What is the residual income of this year’s investment opportunity? What is last year’s residual income?
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 rate of return is 10%. What is last year’s return on investment (ROI)? If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year? 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 $…
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 rate of return is 10%. Required: 1. What is last year’s margin?