Question : 51.Terra Company has two divisions, the Retail Division and the : 1257212

 

 

51.Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions in 2014:  Terra Company has set a target return on investment (ROI) of 15% for both divisions. Based on ROI, which division appears to have performed better?   

A. Retail division.

 

B. Wholesale division.

 

C. Both division have the same results.

 

D. The answer cannot be determined using the information provided.

 

 

52.Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions in 2014:  Assuming that these are the only divisions of Terra Company, calculate ROI for the company as a whole.   

A. 15.7%

 

B. 16.3%

 

C. 16.6%

 

D. 32.3%

 

 

53.Retail Sales and Wholesale Sales are the only divisions of Terra Company. The following information was gathered for the two divisions in 2014:  The company has $1,200,000 in operating assets that are not assigned to either of the divisions and $500,000 in corporate expenses that are not reflected in the information above. Based on this information, what is the ROI for the company as a whole?   

A. 17.7%

 

B. 16.9%

 

C. 15%

 

D. The answer cannot be determined using the information provided.

 

 

54.Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions in 2014:  Terra Company has set a target return on investment (ROI) of 15% for both divisionsWhich of the following statements is accurate?   

A. Residual income for the retail sales division was $100,000

 

B. Residual income for the wholesale sales division was $600,000

 

C. Residual income for the retail sales division was $600,000

 

D. None of these.

 

 

55.In the current year, the New Products Division of Testar Company had operating income of $8,000,000 and operating assets of $44,800,000. Testar has set a target return on investment (ROI) of 16% for each of its divisions. Which of the following statements is correct?   

A. The New Products division yielded ROI that was lower than the target ROI.

 

B. Residual income for the New Products division was $832,000.

 

C. The New Products division yielded no residual income.

 

D. All of these are correct.

 

 

56.The New Products Division, of Testar Company, has developed a potential new product that would require $8,500,000 in operating assets and would be expected to provide $1,400,000 in operating income each year. Testar has set a target return on investment (ROI) of 16% for each of its divisions. Which of the following statements is accurate?   

A. The new product is acceptable because it will yield an ROI that is higher than the target ROI and will yield residual income of $40,000.

 

B. The new product will yield residual income of $45,000.

 

C. The new product will decrease the company wide ROI.

 

D. The new product unacceptable because it will yield an ROI that is lower than the target ROI.

 

 

57.For 2014, the New Products Division, of Testar Company, had operating income of $8,000,000 and operating assets of $44,800,000. The New Products Division has developed a potential new product that would require $8,500,000 in operating assets and would be expected to provide $1,400,000 in operating income each year. Testar has set a target return on investment (ROI) of 16% for each of its divisions. Assuming that the new product is put into production, calculate the division’s ROI.   

A. 17.6%

 

B. 17.9%

 

C. 16.5%

 

D. The answer cannot be determined using the information provided.

 

 

58.For 2014, the New Products Division, of Testar Company, had operating income of $8,000,000 and operating assets of $44,800,000. The New Products Division has developed a potential new product that would require $8,500,000 in operating assets and would be expected to provide $1,400,000 in operating income each year. Testar has set a target return on investment (ROI) of 16% for each of its divisions. Assuming that the new product is put into production, calculate the residual income for the division.   

A. $832,000

 

B. $872,000

 

C. $528,000

 

D. $672,000

 

 

59.The process of evaluating the performance of individual managers is known as:   

A. Responsibility accounting.

 

B. Management by exception.

 

C. Responsibility management.

 

D. Performance management.

 

 

60.All of the following are characteristics that are required for effective responsibility accounting except:   

A. motivation.

 

B. accountability.

 

C. centralization.

 

D. none of these.

 

 

 

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