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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. (Note that this is the same data as that provided for the question above.)| 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. (Note that this is the same data as that provided for the question above.)| 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. (Note that this is the same data as that provided for the question above.)| 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. (Note that this is the same data as that provided for the question above.)| 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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2002 McGraw-Hill Higher Education