7-3 Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000 Variable expenses...
7-3
Westerville Company reported the following results from last year’s operations:
| Sales | $ | 1,500,000 |
| Variable expenses | 690,000 | |
| Contribution margin | 810,000 | |
| Fixed expenses | 435,000 | |
| Net operating income | $ | 375,000 |
| Average operating assets | $ | 1,250,000 |
At the beginning of this year, the company has a $350,000 investment opportunity with the following cost and revenue characteristics:
| Sales | $ | 420,000 | |
| Contribution margin ratio | 70 | % of sales | |
| Fixed expenses | $ | 252,000 | |
The company’s minimum required rate of return is 10%.
What is last year’s return on investment (ROI)? (Round your intermediate calculations to 1 decimal place.)
Homework Answers
Last year's Rate of Return
Rate of Return = Net income / Average Assets = 375,000 / 1,250,000 = 30%
Answer : 30.0%
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7-3
Westerville Company reported the following results from last
year’s operations:
Sales
$
1,500,000
Variable expenses...
Westerville Company reported the following results from last year's operations: Sales Variable expenses Contribution margin Fixed...
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