53) Leete Inc. reported the following results from last year’s operations:
Sales
$
14,000,000
Variable expenses
9,660,000
Contribution margin
4,340,000
Fixed expenses
2,940,000
Net operating income
$
1,400,000
–
Last year’s margin was closest to:
A) 79.0%
B) 31.0%
C) 20.0%
D) 10.0%
54) BR Company has a contribution margin of 40%. Sales are $312,500, net operating income is
$25,000, and average operating assets are $200,000. What is the company’s return on investment
(ROI)?
A) 12.5%
B) 62.5%
C) 8.0%
D) 64.0%
55) Nasser Inc. reported the following results from last year’s operations:
Sales
$
12,600,000
Variable expenses
7,760,000
Contribution margin
4,840,000
Fixed expenses
3,706,000
Net operating income
$
1,134,000
Average operating assets
$
6,000,000
–
Last year’s return on investment (ROI) was closest to:
A) 9.0%
B) 47.6%
C) 18.9%
D) 80.7%
56) Chiodini Inc. has a $900,000 investment opportunity that involves sales of $2,430,000, fixed
expenses of $1,044,900, and a contribution margin ratio of 50% of sales. The ROI for this year’s
investment opportunity considered alone is closest to:
A) 16.3%
B) 18.9%
C) 7.0%
D) 135.0%
57) Anguiano Inc. reported the following results from last year’s operations:
Sales
$
10,500,000
Variable expenses
8,210,000
Contribution margin
2,290,000
Fixed expenses
1,555,000
Net operating income
$
735,000
–
The company’s average operating assets were $5,000,000.
Last year’s return on investment (ROI) was closest to:
A) 7.0%
B) 14.7%
C) 45.8%
D) 47.6%
58) Selma Inc. reported the following results from last year’s operations:
Sales
$
13,800,000
Variable expenses
9,950,000
Contribution margin
3,850,000
Fixed expenses
3,022,000
Net operating income
$
828,000
Average operating assets
$
6,000,000
–
Last year’s margin was closest to:
A) 78.1%
B) 6.0%
C) 13.8%
D) 27.9%
59) Cirone Inc. reported the following results from last year’s operations:
Sales
$
9,600,000
Variable expenses
6,810,000
Contribution margin
2,790,000
Fixed expenses
1,926,000
Net operating income
$
864,000
Average operating assets
$
4,000,000
–
At the beginning of this year, the company has a $1,200,000 investment opportunity with the
following characteristics:
Sales
$
4,200,000
Contribution margin ratio
30
% of sales
Fixed expenses
$
966,000
–
If the company pursues the investment opportunity and otherwise performs the same as last year,
the combined margin for the entire company will be closest to:
A) 3.1%
B) 8.4%
C) 6.3%
D) 12.1%
Contribution margin (30% × $4,200,000)
$
1,260,000
Fixed expenses
Net operating income
$
–
60) Given the following data:
Average operating assets
$
125,000
Total liabilities
$
50,000
Sales
$
300,000
Contribution margin
$
75,000
Net operating income
$
15,000
–
Return on investment (ROI) is:
A) 30%
B) 5%
C) 20%
D) 12%
61) Tadman Inc. reported the following results from last year’s operations:
Sales
$
8,400,000
Variable expenses
5,120,000
Contribution margin
3,280,000
Fixed expenses
2,944,000
Net operating income
$
336,000
–
At the beginning of this year, the company has a $800,000 investment opportunity that involves
sales of $2,800,000, fixed expenses of $756,000, and a contribution margin ratio of 30% of sales.
If the company pursues the investment opportunity and otherwise performs the same as last year,
the combined margin for the entire company will be closest to:
A) 1.0%
B) 3.0%
C) 5.0%
D) 3.8%
Contribution margin (30% × $2,800,000)
840,000
Fixed expenses
756,000
Net operating income
–
62) The following information relates to last year’s operations at the Legumes Division of Gervani
Corporation:
Minimum required rate of return
12
%
Return on investment (ROI)
15
%
Sales
$
900,000
Turnover (on operating assets)
3
times
–
What was the Legume Division’s net operating income last year?
A) $108,000
B) $135,000
C) $36,000
D) $45,000
63) Verbeke Inc. reported the following results from last year’s operations:
Sales
$
6,300,000
Variable expenses
3,890,000
Contribution margin
2,410,000
Fixed expenses
2,032,000
Net operating income
$
378,000
Average operating assets
$
3,000,000
–
Last year’s turnover was closest to:
A) 16.67
B) 0.06
C) 2.10
D) 0.48
64) Condren Inc. reported the following results from last year’s operations:
Sales
$
12,000,000
Variable expenses
7,680,000
Contribution margin
4,320,000
Fixed expenses
3,720,000
Net operating income
$
600,000
Average operating assets
$
6,000,000
At the beginning of this year, the company has a $1,000,000 investment opportunity with the
following characteristics:
Sales
$
1,100,000
Contribution margin ratio
40
% of sales
Fixed expenses
$
363,000
If the company pursues the investment opportunity and otherwise performs the same as last year,
the combined ROI for the entire company will be closest to:
A) 1.1%
B) 8.6%
C) 9.7%
D) 11.3%
Contribution margin (40% × $1,100,000)
$
440,000
Fixed expenses
363,000
Net operating income
$
65) Last year a company had sales of $600,000, a turnover of 3.6, and a return on investment of
18%. The company’s net operating income for the year was:
A) $166,667
B) $108,000
C) $30,000
D) $15,000
66) Boespflug Inc. has a $1,000,000 investment opportunity that involves sales of $900,000, fixed
expenses of $225,000, and a contribution margin ratio of 30% of sales. The margin for this
investment opportunity is closest to:
A) 5.0%
B) 25.0%
C) 75.0%
D) 30.0%
67) Canedo Inc. reported the following results from last year’s operations:
Sales
$
9,600,000
Variable expenses
7,170,000
Contribution margin
2,430,000
Fixed expenses
1,470,000
Net operating income
$
960,000
Average operating assets
$
4,000,000
–
At the beginning of this year, the company has a $700,000 investment opportunity with the
following characteristics:
Sales
$
2,310,000
Contribution margin ratio
60
% of sales
Fixed expenses
$
1,201,200
–
If the company pursues the investment opportunity and otherwise performs the same as last year,
the combined turnover for the entire company will be closest to:
A) 2.98
B) 17.01
C) 2.53
D) 2.04
68) Braymiller Inc. has a $1,600,000 investment opportunity with the following characteristics:
Sales
$
Contribution margin ratio
% of sales
Fixed expenses
$
–
The turnover for this investment opportunity is closest to:
A) 0.04
B) 0.40
C) 2.50
D) 25.00
69) Largo Company recorded for the past year sales of $750,000 and average operating assets of
$375,000. What is the margin that Largo Company needed to earn in order to achieve an ROI of
15%?
A) 2.00%
B) 15.00%
C) 9.99%
D) 7.50%
70) Chavin Company had the following results during August: net operating income, $220,000;
turnover, 5; and ROI 25%. Chavin Company’s average operating assets were:
A) $880,000
B) $44,000
C) $55,000
D) $1,100,000
71) Tallon Inc. has a $1,200,000 investment opportunity that involves sales of $1,680,000, fixed
expenses of $336,000, and a contribution margin ratio of 30% of sales. The turnover for this
investment opportunity is closest to:
A) 1.40
B) 0.10
C) 10.00
D) 0.71
72) The following data has been provided for a company’s most recent year of operations:
Return on investment
20
%
Average operating assets
$
100,000
Minimum required rate of return
15
%
–
The residual income for the year was closest to:
A) $20,000
B) $3,000
C) $5,000
D) $15,000
73) Pankey Inc. has a $700,000 investment opportunity that would involve sales of $1,050,000, a
contribution margin ratio of 40% of sales, and fixed expenses of $325,500. The company’s
minimum required rate of return is 18%. The residual income for this year’s investment
opportunity is closest to:
A) ($31,500)
B) $0
C) $94,500
D) $126,000