Youns Inc.reported the following results from last year's operations: The company's average operating assets were $5,000,000.

At the beginning of this year, the company has a $1,400,000 investment opportunity that involves sales of $2,800,000, fixed expenses of $616,000, 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 turnover for the entire company will be closest to:
A)9.50
B)1.64
C)2.66
D)2.08

Question

Youns Inc.reported the following results from last year's operations:  The company's average operating assets were $5,000,000.

At the beginning of this year, the company has a $1,400,000 investment opportunity that involves sales of $2,800,000, fixed expenses of $616,000, 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 turnover for the entire company will be closest to:
A)9.50 
B)1.64 
C)2.66 
D)2.08

Quizplus · Accepted Answer

Sales = $10,500,000 + $2,800,000 = $13,300,000
Average operating assets = $5,000,000 + $1,400,000 = $6,400,000
Turnover = Sales ÷ Average operating assets = $13,300,000 ÷ $6,400,000 = 2.08

Youns Increported the Following Results from Last Year's Operations: the the Company's