Required information The Foundational 15 [LO11-1, LO11-2] [The following informa

Question

Required information The Foundational 15 [LO11-1, LO11-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year's operations Sales Variable expenses Contribution margin Fixed expenses Net operating income 1,900,000 550,000 1,350,000 875,000 $ 475,000 Average operating assets 1,187,500 At the beginning of this year, the company has a $237,500 investment opportunity with the following cost and revenue characteristics Sales $ 380,000 50 % of sales Contribution margin ratio Fixed expenses 133,000 The company's minimum required rate of return is 10%

Explanation / Answer

Net operating income new investment opportunity=(380000*50%)-133000= $57000 7 Margin = Net operating income/Sales = (475000+57000)/(1900000+380000)= 23.3%

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