4. What is the margin related to this year’s investment opportunity? 5. What is
ID: 2584192 • Letter: 4
Question
4. What is the margin related to this year’s investment opportunity?
5. What is the turnover related to this year’s investment opportunity?
6. What is the ROI related to this year’s investment opportunity?
Required information The Foundational 15 [LO11-1, L011-2] 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 $ 1,750,000 520,000 1,230,000 880,000 350,000 Average operating assets875,000 At the beginning of this year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics Sales Contribution margin ratio Pixed expenses $ 320,000 60% of sales $128,000 The company's minimum required rate of return is 20%.Explanation / Answer
Sales
$ 320,000
Contribution @ 60%
$ 192,000
Fixed Expenses
$ 128,000
Net Operating Income
$ 64,000
3. Margin
$ 192,000
4. Turnover
$ 320,000
5. ROI
=64000/200000
32%
Sales
$ 320,000
Contribution @ 60%
$ 192,000
Fixed Expenses
$ 128,000
Net Operating Income
$ 64,000
3. Margin
$ 192,000
4. Turnover
$ 320,000
5. ROI
=64000/200000
32%
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