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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 | |
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 margin by its average operating assets. |
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| 3 | |
Which of the following is not considered an operating asset for purposes of calculating return on investment? |
| | A) | Cash |
| | B) | Common stock |
| | C) | Inventory |
| | D) | Plant equipment |
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| 4 | |
The Southeastern Division of Erie, Inc. recorded operating data as follows for the past year:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379611/634791/ch12q04_056.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (17.0K)</a>]]>
What was the division's return on investment for the past year? |
| | A) | 12.50%. |
| | B) | 20.50%. |
| | C) | 25.00% |
| | D) | 31.25%. |
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| 5 | |
The Southeastern Division of Erie, Inc. recorded operating data as follows for the past year:
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379611/634791/ch12q04_056.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (17.0K)</a>]]>
What was the division's margin for the past year? |
| | A) | 12.50%. |
| | B) | 13.00%. |
| | C) | 14.75%. |
| | D) | 15.00%. |
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| 6 | |
The Southeastern Division of Erie, Inc. recorded operating data as follows for the past year:
<![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379611/634791/ch12q04_056.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (17.0K)</a>]]>
What was the division's turnover for the past year? |
| | A) | 2. |
| | B) | 4. |
| | C) | 10. |
| | D) | 25. |
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| 7 | |
The following data are available for the Central Division of Grand, Inc. and the single product it makes:
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379611/634791/ch12q07.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (16.0K)</a>]]>
How many units must the division sell each year to achieve an ROI of 16%? |
| | A) | 52,000 |
| | B) | 65,000 |
| | C) | 240,000 |
| | D) | 1,300,000 |
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| 8 | |
The Northwest Division of Huron Company recorded operating data as follows for the past year.
 <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073379611/634791/ch12q08.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (17.0K)</a>]]>
What was the company's minimum required rate of return for the past year? |
| | A) | 11%. |
| | B) | 12%. |
| | C) | 13%. |
| | D) | 14%. |
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| 9 | |
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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| 10 | |
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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