Question

Cabell Products is a division of a major corporation. Last year the division had total sales of $28,540,000, net operating income of $2,597,140, and average operating assets of $5,708,000. The company's minimum required rate of return is 10%. The division's margin is closest to: Multiple Choice 20.0% 45.5% 9.1% 91.0%

Answer 1

Answer:

9.1%

Explanation:

With regards to the above, margin is computed as;

Margin = (Net operating income ÷ Sales) × 100

Given that:

Net operating income = $2,597,140

Sales = $28,540,000

Margin = ($2,597,140 ÷ $28,540,000) × 100

Margin = 9.1%