An investment center has income of $13,500,000 and average assets of $60,000,000. Return on investment is

 An investment center has income of $13,500,000 and average assets of $60,000,000. Return on investment is:

Multiple Choice

71.0%.


34.3%.


29.0%.


77.5%.


22.5%. Correct

Explanation
Return on investment = $13,500,000/$60,000,000 = 22.5%

A company’s division has sales of $6,000,000, income of $240,000, and average assets of $4,800,000. The division’s investment turnover is

 A company’s division has sales of $6,000,000, income of $240,000, and average assets of $4,800,000. The division’s investment turnover is:

Multiple Choice

0.80.


5.00.


1.25. Correct

4.00.


1.20.

Explanation
Investment turnover = $6,000,000 / $4,800,000 = 1.25

A retailer reports the following for its geographic divisions for the year. The profit margin for its Europe division is:

 A retailer reports the following for its geographic divisions for the year. The profit margin for its Europe division is:
 

     Americas    Europe    China
Income    $ 600,000    $ 160,000    $ 120,000
Sales    2,000,000    800,000    480,000
Multiple Choice

30%.


20%. Correct

15%.


25%.


35%.

Explanation
Profit margin (Europe) = $160,000/$800,000 = 20%

Dartford Company reported the following financial data for one of its divisions for the year; average investment center total assets of

 Dartford Company reported the following financial data for one of its divisions for the year; average investment center total assets of $3,800,000; investment center income $655,000; a target income of 12% of average invested assets. The residual income for the division is:

Multiple Choice

$1,111,000.


$534,600.


$576,400.


$733,600.


$199,000 Correct
 

Explanation
Target investment center income = $3,800,000 × 12% = $456,000
$655,000 − $456,000 = $199,000

Two investment centers at Marshman Corporation have the following current-year income and asset data:

 Two investment centers at Marshman Corporation have the following current-year income and asset data:
 

Investment Center    Income    Average Assets
A    $ 450,000    $ 3,100,000
B    560,000    2,300,000

The return on investment (ROI) for Investment Center A is:

Multiple Choice

648.30%


25.50%


14.52% Correct

20.50


42.00

Explanation
ROI = $450,000/$3,100,000 = 14.52%

A company’s division has sales of $6,000,000, income of $240,000, and average assets of $4,800,000. The division’s return on investment is

 A company’s division has sales of $6,000,000, income of $240,000, and average assets of $4,800,000. The division’s return on investment is:

Multiple Choice

80%.


20%.


10%.


5%. Correct

4%.

Explanation
Return on investment = $240,000/$4,800,000 = 0.05 or 5%

Carter Company reported the following financial numbers for one of its divisions for the year

 Carter Company reported the following financial numbers for one of its divisions for the year; average assets of $4,280,000; sales of $4,705,000; cost of goods sold of $2,730,000; and operating expenses of $1,552,000. Assume a target income of 8% of average assets. Compute residual income for the division:

Multiple Choice

$38,100.


$158,000.


$33,840.


$90,600.


$80,600.

Answer

$80,600.

Explanation
$4,705,000 − 2,730,000 − 1,552,000 = $423,000; $423,000 − ($4,280,000 × 8%) = $80,600