Question :
128.An investment center generated a contribution margin of $400,000, fixed : 1311872
128.An investment center generated a contribution margin of $400,000, fixed costs of $200,000 and sales of $2,000,000. The center’s average operating assets were $800,000. How much is the return on investment?
a.25%
b.175%
c.50%
d.75%
129. Rhein Manufacturing recorded operating data for its auto accessories division for the year.
Sales$750,000
Contribution margin150,000
Total direct fixed costs90,000
Average total operating assets400,000
How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30,000, assuming fixed costs are held constant?
a.45.0%
b.22.5%
c.15.0%
d.12.0%
130.The current controllable margin for Henry Division is $93,000. Its current operating assets are $300,000. The division is considering purchasing equipment for $90,000 that will increase annual controllable margin by an estimated $15,000. If the equipment is purchased, what will happen to the return on investment for Henry Division?
a.An increase of 16.1%
b.A decrease of 13.3%
c.A decrease of 3.3%
d.A decrease of 7.2%
131. Monte, Inc. recorded operating data for its Sandtrap division for the year. Monte requires its return to be 9%.
Sales$1,000,000
Controllable margin180,000
Total average assets600,000
Fixed costs60,000
How much is ROI for the year?
a.10%
b.17%
c.20%
d.30%
132.Betsy Union is the Pika Division manager and her performance is evaluated by executive management based on Division ROI. The current controllable margin for Pika Division is $46,000. Its current operating assets total $210,000. The division is considering purchasing equipment for $40,000 that will increase sales by an estimated $10,000, with annual depreciation of $10,000. If the equipment is purchased, what will happen to the return on investment for the division?
a.An increase of 0.5%
b.A decrease of 0.5%
c.A decrease of 3.5%
d.It will remain unchanged.
133.Benet Division of United Refinery Company’s operating results include: controllable margin, $200,000; sales $2,200,000; and operating assets, $800,000. The Benet Division’s ROI is 25%. Management is considering a project with sales of $100,000, variable expenses of $60,000, fixed costs of $40,000; and an asset investment of $150,000. Should management accept this new project?
a.No, since ROI will be lowered.
b.Yes, since ROI will increase.
c.Yes, since additional sales always mean more customers.
d.No, since a loss will be incurred.
134.The Fulmar Division of Jayne Manufacturing had an ROI of 25% when sales were $3 million and controllable margin was $600,000. What were the average operating assets?
a.$150,000
b.$750,000
c.$2,400,000
d.$12,000
135.Naples, Inc. recorded operating data for its shoe division for the year.
Sales$750,000
Contribution margin135,000
Total fixed costs90,000
Average total operating assets300,000
How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30,000, assuming fixed costs are held constant?
a.25%
b.18%
c.45%
d.12%
136.A distinguishing characteristic of an investment center is that
a.revenues are generated by selling and buying stocks and bonds.
b.interest revenue is the major source of revenues.
c.the profitability of the center is related to the funds invested in the center.
d.it is a responsibility center which only generates revenues.
137.A measure frequently used to evaluate the performance of the manager of an investment center is
a.the amount of profit generated.
b.the rate of return on funds invested in the center.
c.the percentage increase in profit over the previous year.
d.departmental gross profit.
