Sacha Works for an Organization That Follows a Decentralized Model

Multiple Choice

Sacha works for an organization that follows a decentralized model. Erin, the production manager of her business unit has come to Sacha to discuss the possibility of purchasing a new piece of equipment. Erin indicated that this new equipment could generate $23,500 of sales, and the expenses (after depreciation) to support it would be 70% of the new sales. After speaking to a supplier, Erin learns that the new equipment can be purchased for $15,750. What are the Profit Margin and the Investment Turnover for the new equipment?

A) Profit Margin: 0.30, Investment Turnover: 1.492
B) Profit Margin: 0.70, Investment Turnover: 1.044
C) Profit Margin: 1.044, Investment Turnover: 0.70
D) Profit Margin: 1.492, Investment Turnover: 0.30