Question

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: Multiple Choice

78.1%
6.0%
13.8%
27.9%

Answer 1

Answer:

6%

Explanation:

Given that,

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:

= (Net income ÷ Sales) × 100

= ($828,000 ÷ $13,800,000) × 100

= 6%

Therefore, the last year's margin was closest to 6%.