51.Firms often view investment centers as:
B.Discretionary cost centers.
E.None of the above.
52.Which of the following is not a popular measure of investment center performance?
B.Return on investment.
D.Economic value added.
E.None of the above.
53.When a company is attempting to increase return on investment (ROI) it should work to:
D.Decrease operating assets.
54.When measuring average operating assets, depreciable fixed assets may be included at any value except:
A.Gross book value.
B.Net book value.
C.Current replacement value.
D.Original cost less estimated salvage.
55.The Gallagher Company is decentralized and has a required opportunity cost of capital of 20%. The West division, whose current return on investment (ROI) is 15%, is considering an investment which will earn a return of 18%. The East Division, whose current ROI is 25%, is considering an investment which will earn a return of 22%. If the objective is to maximize ROI, each division will make the following choice:
56.Supercircuits is a decentralized company and has a required opportunity cost of capital of 15%. The home computer division, whose current ROI is 10%, is considering an investment which will earn a 13% return. The gaming division, whose current ROI is 20%, is considering an investment which will earn a 17% return. If the objective is to maximize residual income, each division will make the following choice:
57.The Hoboken Company has two divisions, North and South. In July, contribution margin for North was $126,000 and sales in the South division were $375,000 with a contribution margin ratio of 40%. Traceable fixed costs for the divisions totaled $101,000. If net operating income was $69,000, then total fixed costs must have been:
58.The Brett Company has provided the following information for its two stores:
Store AStore BTotal
Traceable fixed costs80,00050,00080,000
Common fixed expenses160,000
Net operating income$140,000
If Store B increases its sales by $50,000 with no change in fixed expenses the overall company net income will:
A.Increase by $12,500.
B.Increase by $35,000.
C.Increase by $50,000.
D.Increase by $15,000.
59.In 2013 the Yankee Company had average operating assets of $200,000. If the company reported a return on investment of 50% then net operating income for 2013 must have been:
60.In 2013 the Porter Company reported the following information:
Average operating assets$600,000
Return on investment22%
The company’s required rate of return was: