50.1K
Verified Solution
Link Copied!
Robichau Incorporated reported the following results from last years operations:
| Sales | $ 6,300,000 |
| Variable expenses | 4,930,000 |
| Contribution margin | 1,370,000 |
| Fixed expenses | 803,000 |
| Net operating income | $ 567,000 |
| Average operating assets | $ 3,000,000 |
At the beginning of this year, the company has a $900,000 investment opportunity with the following characteristics:
| Sales | $ 1,530,000 | |
| Contribution margin ratio | 30 | % of sales |
| Fixed expenses | $ 306,000 | |
The companys minimum required rate of return is 20%.
If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:
Multiple Choice
$776,100
($17,100)
$720,000
($60,000)
Answer & Explanation
Solved by verified expert
