Question Details

(Solution Download) Westerville Company reported the following results from last yearAc??cs operations Sales $ 1,400,


 

 

 

 

 

 

 

Westerville Company reported the following results from last

 

yearAc??cs operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Sales$

 

1,400,000    

  Variable

 

expenses

720,000

 

   

  Contribution

 

margin

680,000

 

   

  Fixed expenses

 

470,000    

  Net operating

 

income

$210,000

 

   

  Average operating

 

assets

$875,000

 

   

 


 

 

 

 

 

 

 

 

This year, the company has a $350,000 investment opportunity

 

with the following cost and revenue characteristics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Sales$560,000
  Contribution margin

 

ratio

70% of sales
  Fixed expenses$336,000

 

 

 

 

 

 

 

 

 

 

The companyAc??cs 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 .1234

 

should be entered as 12.23)

 

 

 

 

 

 

 

 

 

8.

 

If the company pursues the investment opportunity and otherwise

 

performs the same as last year, what turnover will it earn this

 

year? (Round your answer to 2 decimal places)

 

 

 

 

 

 

 

 

 

9.

 

If the company pursues the investment opportunity and otherwise

 

performs the same as last year, what ROI will it earn this year?

 

(Round your percentage answer to 1 decimal place (i.e.,

 

0.1234 should be considered as 12.3%.)) - percentage

 

 

 

 

 

 

 

 

 

11.

 

What is last yearAc??cs residual income?

 

 

 

 

 

 

 

 

 

12.

 

What is the residual income of this yearAc??cs investment

 

opportunity?

 

 

 

 

 

 

 

 

 

13.

 

If the company pursues the investment opportunity and otherwise

 

performs the same as last year, what residual income will it earn

 

this year?

 

 

  

 


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