User Account

All Pages

Assume that the contribution margin ratio of the investment

Assignment Help Accounting Basics
Reference no: EM13482898

Westerville Company reported the following results from last year % 2013 operations:

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%u2019s minimum required rate of return is 15%.

1. What is last year's margin?

2. What is last year's turnover?

3. What is lat year's ROI?

Can you provide formulas or explainations - I'd like to figure this on my own?

4. What is the margin related to this year's investment opportunity? How did you get this answer?

5. What is the turnover related to this year's investment opportunity? How did you get this answer?

6. What is the ROI related to this year's investment opportunity? How did you get this answer?

7. If the company pursues the investment opportunity and otherwise performs thesame as last year, what margin wil it earn this year?

8. If the company pursues the investment opportunity and otherwise performs the same as last year, what turnover will it earn this year

9. If the company pursues the investment opportunity and otherwise performs the same as last year,what ROI will it yearn this year?

10. If westervilles CEOwill earn a bonus only if her ROI from this year exceeds her ROI from last year, would she pursue the investment opportunity?Would the owners of the company wanther to pursue the investment?

11. What is last year's residual income?

12. What is the residula income of this year's investment opportunity?

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

14. if Westervilles CEO will earn bonus only if her residual income from this year exceeds her residual income fromlast year, would se purse the investment opportunity?

15. Assume that the contribution margin ratio of the investment opportunity was 50% instead of 60%. if westervilles CEO will only earn a bonus if her resigual income fromthis year exceeds her residual income from last year, would she pursue the investment opportunity? Would the owners of the company want her to pursue the investment opportunity?

Reference no: EM13482898

Questions Cloud

Batpro makes metal baseball bats each bat requires 1 kg of : batpro makes metal baseball bats. each bat requires 1 kg. of aluminum at 20 per kg. and 0.50 direct labor hours at 16
Allinsurance is also refusing to cover this damage on the : for more information on format and other requirements please read the relevant section in the course descriptionjason
An operating activity that the company likely engages in : all businesses are involved in three types of activities-financing investing and operating. listed below are the names
Assume that you are a manager and you have three potential : assume that you are a manager and you have three potential capital investment projects to choose from. funds are
Assume that the contribution margin ratio of the investment : westerville company reported the following results from last year 2013 operationssales 1000000variable expenses
Exotic cuisines employee stock optionsas a newly minted mba : exotic cuisines employee stock optionsexotic cuisines employee stock optionsas a newly minted mba youve taken a
What is the amount of uncollectible accounts expense for : classic auto parts sells new and used auto parts. although a majority of its sales are cash sales it makes a
Jodi horton president of the retailer crestline products : jodi horton president of the retailer crestline products has just approached the companys bank with a request for a
Indicate whether each of the following items is most : indicate whether each of the following items is most closely associated with the management discussion and analysis

Reviews

Write a Review

Accounting Basics Questions & Answers

  Types of adjustments applicable to category

Distinguish between the two categories of adjusting entries, and identify the types of adjustments applicable to each category.

  Deduction for organizational expenses

Assume Coral Corporation makes an appropriate and timely election under § 248. What is Coral's deduction for organizational expenditures for 2010?

  Necessary entries in the books of oshim company

Show the necessary entries in the books of Oshim Company Limited.

  Projects having normal cash flows

Ahyee Corp. is considering two equally risky, mutually exclusive projects, both of which projects have normal cash flows. Project A has an IRR of IRR of 11%, while Project B's IRR is 14%.

  Accounting criteria for recognizing

Determine which of the following is not an example of a decision or informed judgment that a potential employee could make from accounting information?

  Compute the break-even point in dollars under each of the

fredonia inc. had a bad year in 2013. for the first time in its history it operated at a loss. the companys income

  The expense recognition principle relates to credit losses

The expense recognition principle relates to credit losses by stating

  Currently chester is paying a dividend of 1610 per share if

currently chester is paying a dividend of 16.10 per share. if this dividend were raised by 3.64 given its current stock

  Effect of full cost-variable cost transfer pricing method

Examine the effect of both full-cost and variable-cost transfer pricing methods on Phipps' cash flows by using a spreadsheet program such as Excel.

  Operating income and comprehensive income

Write a 200- to 300-word response to the problem. In addition, include your analysis of indicators such as earnings per share, operating income, and comprehensive income.

  Complete the production cost report

Massey Corporation uses a process cost system and the weighted-average cost flow assumption. Production begins in the Fabricating Department-Complete the Production Cost Report for March

  Regulations ultimately issued for that statute

When Congress passes a statute with language such as, "The Secretary shall prescribe such regulations as he may deem necessary," the regulations ultimately issued for that statute are:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd