Westerville Company reported the following results from last year's operations:
|
| Sales |
$ |
1,600,000 |
| Variable expenses |
|
700,000 |
|
|
|
| Contribution margin |
|
900,000 |
| Fixed expenses |
|
660,000 |
|
|
|
| Net operating income |
$ |
240,000 |
|
|
|
| Average operating assets |
$ |
1,000,000 |
|
|
|
|
|
This year the company has a $325,000 investment opportunity with the following cost and revenue characteristics:
|
|
|
| Sales |
$ |
520,000 |
|
| Contribution margin ratio |
|
70 |
% of sales |
| Fixed expenses |
$ |
312,000 |
|
|
|
| The company's minimum required rate of return is 15%. |
|
What is the margin related to this year's investment opportunity?