Cabell Products is a division of a major corporation. Last year the division had total sales of $25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000. The company's minimum required rate of return is 10%.The division's margin is closest to:
A) 23.7%
B) 7.6%
C) 32.1%
D) 31.3%

Question

Quizplus · Accepted Answer

The division's margin is calculated as net operating income divided by total sales. Therefore, the margin is $1,924,320 / $25,320,000 = 0.076 or 7.6%.

Cabell Products Is a Division of a Major Corporation