Cornwall Company has two divisions, A and B. Information for each division is as follows: A B Net earnings for division $ 40,000 $ 260,000 Asset base for division $100,000 $1,200,000 Target rate of return 15% 18% Margin 10% 20% Weighted average cost of capital 12% 12% What is the total sales amount for B

$1,300,000

Explanation:

The computation of the total sales amount for B is shown below:

As we know that

Net income ÷ sales = Margin turnover

where,

Net income for division B is $260,000

And the margin turnover is 10%

Now placing these items values, the sales revenue for the division B is

$260,000 ÷ sales = 20%

So, the sales amount for division B is

= $260,000 ÷ 20%

= $1,300,000

We simply applied the above formula so that the total sales for division B could arrive

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answer; monopolistic competition;