The following information relates to last year's operations at the Legumes Division of Gervani Corporation: What was the Legume Division's net operating income last year?
A)$108,000
B)$135,000
C)$36,000
D)$45,000

Question

The following information relates to last year's operations at the Legumes Division of Gervani Corporation:  What was the Legume Division's net operating income last year?
A)$108,000 
B)$135,000 
C)$36,000 
D)$45,000

Quizplus · Accepted Answer

ROI = Margin × Turnover
15% = Margin × 3
Margin = 15% ÷ 3 = 5%
Margin = Net operating income ÷ Sales
5% = Net operating income ÷ $900,000
Net operating income = 5% × $900,000 = $45,000

The Following Information Relates to Last Year's Operations at the Legumes