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1 | |
A segment of a business responsible for both revenues and expenses would be referred to as: |
| | A) | a cost center. |
| | B) | an investment center. |
| | C) | a profit center. |
| | D) | residual income. |
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2 | |
Which of the following is not an operating asset? |
| | A) | Cash |
| | B) | Common stock |
| | C) | Inventory |
| | D) | Plant equipment |
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3 | |
A company's return on investment is computed by: |
| | A) | dividing its margin by its turnover. |
| | B) | dividing its turnover by its average operating assets. |
| | C) | multiplying its margin by its turnover. |
| | D) | multiplying its by its average operating assets. |
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4 | |
Assuming that sales and net income remain the same, a company's return on investment will: |
| | A) | increase if its operating assets increase. |
| | B) | decrease if its operating assets decrease. |
| | C) | decrease if its turnover decreases. |
| | D) | decrease if its turnover increases. |
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5 | |
The performance of the manager of Division A is measured by residual income. Which of the following would increase the manager's performance measure? |
| | A) | A decrease in the division's average operating assets. |
| | B) | A decrease in the division's net operating income. |
| | C) | An increase in the division's average operating assets. |
| | D) | An increase in the minimum required return. |
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6 | |
The following data are available for the Midwest Division of Dimension Products, Inc. and the single product it makes. | Unit selling price | $40 | | Variable cost per unit | $24 | | Annual fixed costs | $560,000 | | Average operating assets | $3,000,000 |
How many units must the Midwest Division sell each year to have an ROI of 16%? |
| | A) | 52,000. |
| | B) | 65,000. |
| | C) | 240,000. |
| | D) | 1,300,000. |
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7 | |
The Western Division of Vollick Enterprises recorded operating data as follows for the past year. | Sales | $400,000 | | Net operating income | 50,000 | | Average operating assets | 200,000 | | Stockholders' equity | 160,000 | | Residual income | 26,000 |
For the past year, the return on investment was: |
| | A) | 15.75%. |
| | B) | 20.50%. |
| | C) | 25.00%. |
| | D) | 31.25%. |
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8 | |
The Western Division of Vollick Enterprises recorded operating data as follows for the past year. | Sales | $400,000 | | Net operating income | 50,000 | | Average operating assets | 200,000 | | Stockholders' equity | 160,000 | | Residual income | 26,000 |
For the past year, the margin was: |
| | A) | 12.50%. |
| | B) | 13.00%. |
| | C) | 14.75%. |
| | D) | 15.00%. |
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9 | |
The Western Division of Vollick Enterprises recorded operating data as follows for the past year. | Sales | $400,000 | | Net operating income | 50,000 | | Average operating assets | 200,000 | | Stockholders' equity | 160,000 | | Residual income | 26,000 |
For the past year, the turnover was: |
| | A) | 2. |
| | B) | 4. |
| | C) | 10. |
| | D) | 25. |
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10 | |
The Western Division of Vollick Enterprises recorded operating data as follows for the past year. | Sales | $400,000 | | Net operating income | 50,000 | | Average operating assets | 200,000 | | Stockholders' equity | 160,000 | | Residual income | 26,000 |
For the past year, the minimum required rate of return was: |
| | A) | 11%. |
| | B) | 12%. |
| | C) | 13%. |
| | D) | 14%. |
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