Westerville Company reported the following results from last years operations: ...
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Accounting
Westerville Company reported the following results from last years operations:
Sales
$
1,500,000
Variable expenses
500,000
Contribution margin
1,000,000
Fixed expenses
700,000
Net operating income
$
300,000
Average operating assets
$
1,000,000
This year the company has a $200,000 investment opportunity with the following cost and revenue characteristics:
Sales
$
300,000
Contribution margin ratio
60
% of sales
Fixed expenses
$
132,000
The companys minimum required rate of return is 10%.
Required:
If the company pursues the investment opportunity and otherwise performs the same as last year, what margin will it earn this year? (Round your answer to 1 decimal place.)
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