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Westerville Company reported the following results from last year’s operations:What is last year’s margin? What is last year’s turnover? What is last year’s return on investment (ROI)? What is the margin related to this year’s investment opportunity? Wh

Westerville Company reported the following results from last year’s operations:


 



  Sales$1,750,000    
  Variable expenses
520,000    



  Contribution margin
1,230,000    
  Fixed expenses
880,000    



  Net operating income$ 350,000    





  Average operating assets$875,000    







 

This year, the company has a $200,000 investment opportunity with the following cost and revenue characteristics:


 



  Sales$320,000
  Contribution margin ratio
60 % of sales
  Fixed expenses$128,000


The company’s minimum required rate of return is 20%.
 


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