Westerville Company reported the following results from last year's operations:
Sales $1,500,000
Variable expenses 730,000
Contribution margin 770,000
Fixed expenses 470,000
Net operating income $300,000
Average operating assets $937,500
At the beginning of this year, the company has a $362,500 investment opportunity with the following cost and revenue characteristics:
Sales $580,000
Contribution margin ratio 70 % of sales
Fixed expenses $319,000
The company's minimum required rate of return is 10%.
Required:
a. What is last year's margin?
b. What is last year's turnover?
c. What is last year's return on investment (ROI) ?
d. What is the margin related to this year's investment opportunity?
e. What is the turnover related to this year's investment opportunity?
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