Elway Company provided the following income statement for the last year Sales $ 980,000 Less Variable expenses 670,000 Contribution margin $310,000 Less Fixed expenses 172,800 Operating income $137,200 At the beginning of last year, Elway had $ 44,500 in operating assets At the end of the year, Elw...

44500 33900 39200 1 Average operating assets 2 2 Margin 137200 014 or 14 980000 Turnover 980000 25 3 ...

Elway Company provided the following income statement for the last year: Sales ...............$ 980,000 Less: Variable expenses

Question:

Elway Company provided the following income statement for the last year:
Sales ...............$ 980,000
Less: Variable expenses ....... 670,000
..........$310,000
Less: Fixed expenses ......... 172,800
Operating income ..........$137,200
At the beginning of last year, Elway had $ 44,500 in operating assets. At the end of the year, Elway had $ 33,900 in operating assets.
Required:
1. Compute average operating assets.
2. Compute the margin and turnover ratios for last year.
3. Compute ROI.
4. Briefly explain the meaning of ROI.
5. Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company). Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...