Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed...
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Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses $ 1,200,000 420,000 780,000 600,000 Net operating income $ 180,000 Average operating assets $ 600,000 At the beginning of this year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics: Sales $ 220,000 Contribution margin ratio 60 of sales Fixed expenses $ 99,000 The company's minimum required rate of return is 20%. 9. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Do not round intermediate calculations. Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) RO % 12. What is the residual income of this year's investment opportunity? Residual income 13. If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year? Residual income Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed expenses $ 1,200,000 420,000 780,000 600,000 Net operating income $ 180,000 Average operating assets $ 600,000 At the beginning of this year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics: Sales $ 220,000 Contribution margin ratio 60 of sales Fixed expenses $ 99,000 The company's minimum required rate of return is 20%. 9. If the company pursues the investment opportunity and otherwise performs the same as last year, what ROI will it earn this year? (Do not round intermediate calculations. Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) RO % 12. What is the residual income of this year's investment opportunity? Residual income 13. If the company pursues the investment opportunity and otherwise performs the same as last year, what residual income will it earn this year? Residual income
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Residual incomenet operating incomeAverage operating assetsminimum requi... View the full answer
Related Book For
Introduction to Managerial Accounting
ISBN: 978-0078025792
7th edition
Authors: Peter Brewer, Ray Garrison, Eric Noreen
Posted Date:
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