The following information applies to the questions displayed below Westerville C

Question

The following information applies to the questions displayed below Westerville Company reported the following results from last year's operations: Salos $1,400,000 Varlable expenses 680,000 Contribution margin 720,000 Fixed expenses Net operating Income Average operating assets 440,000 $ 280,000 $ 875,000 This year, the company has a $300,000 Investment opportunity with the following cost and revenue characterlstics Sals Contribution margin ratio Fixed expenses $480,000 80 % of sales $336,000 The company's minimum required rate of return is 15%.

Explanation / Answer

Particulars Amt Sales Revenue 480000 Less: Variable Cost (480000 x 20%) 96000 Contribution Margin 384000 Less: Fixed Cost 336000 Net Income 48000 Less: Required Return (300000 x 15%) 45000 Residual Income 3000

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