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Westerville Company reported the following results from last years operations:
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| Sales | $ | 1,200,000 |
| Variable expenses | | 420,000 |
| | | |
| Contribution margin | | 780,000 |
| Fixed expenses | | 600,000 |
| | | |
| Net operating income | $ | 180,000 |
| | | |
| Average operating assets | $ | 600,000 |
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| |
This year, the company has a $137,500 investment opportunity with the following cost and revenue characteristics:
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| Sales | $ | 220,000 | |
| Contribution margin ratio | | 60 | % of sales |
| Fixed expenses | $ | 99,000 | |
| |
The companys minimum required rate of return is 20%.
1. What is last years margin?
2. What is last years turnover? (Round your answer to 1 decimal place.)
3. What is last years return on investment (ROI)?
4. What is the margin related to this years investment opportunity?
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