Westerville Company reported the following results from last
year’s operations:

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Question: Westerville Company reported the following results from last year’s operations:  …
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  Sales $ 1,000,000   
  Variable expenses 300,000
  
  Contribution margin 700,000
  
  Fixed expenses 500,000
  
  Net
operating income
$ 200,000
  
  Average operating assets $ 625,000
  

This year the company has a $120,000 investment opportunity with
the following cost and revenue characteristics:

Sales $ 200,000
Contribution
margin ratio
60 % of sales
Fixed
expenses
$ 90,000

The company’s minimum required rate of return is 15%

Required:

If the company pursues the investment opportunity and otherwise
performs the same as last year, what turnover will it earn this
year? (Round your answer to 2 decimal places.)

Turnover

What is last year’s redsidual income?

Residual income $?

What is the residual income of thsi year’s investment
opportunity?

Residual income $?

If the company pursues the investment opportunity and otherwise
performs the same as last year, what residual income will it earn
this year?

Residual Income $?

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