51 firms often view investment centers as a support activities b discretionary cost 4313252

51 firms often view investment centers as a support activities b discretionary cost 4313252

51.Firms often view investment centers as:

A.Support activities.

B.Discretionary cost centers.

C.Stand-alone businesses.

D.Revenue centers.

E.None of the above.

52.Which of the following is not a popular measure of investment center performance?

A.Employee turnover.

B.Return on investment.

C.Residual income.

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:

A.Decrease sales.

B.Decrease profits.

C.Increase costs.

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:

WestEast

A.RejectAccept

B.AcceptReject

C.AcceptAccept

D.RejectReject

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:

ComputerGaming

A.RejectAccept

B.AcceptReject

C.AcceptAccept

D.RejectReject

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:

A.$106,000

B.$207,000

C.$282,000

D.$170,000

58.The Brett Company has provided the following information for its two stores:

Store AStore BTotal

Sales$700,000$500,000$1,200,000

Variable expenses420,000350,000770,000

Contribution margin280,000150,000430,000

Traceable fixed costs80,00050,00080,000

Segment margin200,000100,000300,000

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:

A.$100,000

B.$50,000

C.$400,000

D.$200,000

60.In 2013 the Porter Company reported the following information:

Sales$1,100,000

Average operating assets$600,000

Residual income$42,000

Return on investment22%

The company’s required rate of return was:

A.11.3%

B.33.3%

C.15%

D.29%

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