Question 1

Bethel Corporation's Ambulance division reported net operating profits of $1,500,000 during the year.The division absorbed common fixed corporate expenses of $900,000.The division's segment margin is
A) $600,000.
B) $900,000.
C) $620,000.
D) $2,400,000.

Accepted Answer

The answer of Bethel Corporation's Ambulance division reported net operating...

Question 2

A profit center manager should be evaluated by
A)Examination of actual costs against budgeted costs.
B)A review of both revenues and expenses,with a focus on operating income.
C)How well assets have been used to generate income.
D)None of these ans choices are correct.

Accepted Answer

A profit center manager should be evaluated by looking at both revenues and expenses, with a focus on operating income, as this gives a complete picture of how effectively the manager is running the profit center. Examining actual costs against budgeted costs and evaluating how well assets have been used are important considerations, but they should be part of a broader analysis that incorporates all aspects of the profit center's financial performance. Therefore, option B is the best choice.

Question 3

Which of the following assets would $\textbf{         not }$  be included in average operating assets used to calculate ROI?
A)Building
B)Equipment used in production
C)Equipment no longer in use
D)Factory machinery

Accepted Answer

Equipment no longer in use would not be considered as it is not actively contributing to the production or operations of the business.

Question 4

The Delta division of Georgia Corporation generated division generated net revenues of $6,000,000 and variable expenses of $3,500,000 during the year.If direct fixed costs were $1,000,000 and the segment margin was $1,500,000,what are the common corporate fixed costs?
A) $1,500,000
B) $4,500,000
C) $5,00,000
D) The ans cannot be determined from the information given.

Accepted Answer

The answer of The Delta division of Georgia Corporation generated...

Question 5

Ruhlen Corporation's Small Craft division reported a net operating loss of $2,300,000 in the most recent reporting period.The division absorbed common fixed corporate expenses of $2,500,000.The division's segment margin is
A) $2,500,000.
B) $2,300,000.
C) $200,000.
D) $4,800,000.

Accepted Answer

The answer of Ruhlen Corporation's Small Craft division reported a...

Question 6

In calculating ROI,the return on investment is based on
A)The book value of operating assets.
B)The fair market value of operating assets.
C)The historical cost of operating assets.
D)None of these ans choices are correct.

Accepted Answer

The answer of In calculating ROI,the return on investment is...

Question 7

The formula for calculating ROI is
A)Segment margin divided by internal rate of return.
B)Internal rate of return divided by average operating assets.
C)Operating income divided by average operating assets.
D)None of these ans choices are correct.

Accepted Answer

ROI (return on investment) is calculated by dividing the operating income (or profit) by the average operating assets. This formula helps to measure how efficiently a company is using its resources to generate profits. Option A is incorrect because segment margin is not relevant to the calculation of ROI. Option B is incorrect because dividing internal rate of return by average operating assets does not give a meaningful measure of ROI. Option D is incorrect because there is no correct answer among the choices.

Question 8

In the calculation of ROI,the most common measure for average operating assets is
A)Ending balance.
B)Beginning balance.
C)Appraised balance.
D)Average of the assets during the year.

Accepted Answer

To calculate ROI, we need to use the average operating assets over the period. This is calculated by adding the beginning and ending balances of the assets and dividing by two. So the most common measure for average operating assets is the average of the assets during the year.

Question 9

In the most recent reporting period,Athens Corporation's Legion division generated net revenues of $2,000,000 and variable expenses of $700,000.Direct fixed expenses were $500,000 and common corporate fixed expenses were $250,000.What is the division's segment margin?
A) $550,000
B) $800,000
C) $1,050,000
D) $1,300,000

Accepted Answer

The answer of In the most recent reporting period,Athens Corporation's...

Question 10

The DuPont model for calculating ROI contains which of the following components?
A)Asset turnover
B)Internal rate of return
C)Both asset turnover and internal rate of return.
D)Neither asset turnover nor internal rate of return.

Accepted Answer

The DuPont model for calculating ROI includes three components: profit margin, asset turnover, and financial leverage. Internal rate of return (IRR) is not included in the DuPont model. Therefore, the correct answer is A) Asset turnover.

Question 11

The formula for calculating ROI is
A)Segment margin divided by average operating assets.
B)Segment margin divided by internal rate of return.
C)Internal rate of return divided by average operating assets.
D)None of these ans choices are correct.

Accepted Answer

The formula for calculating ROI is Segment margin divided by average operating assets. This formula measures how efficiently a company is using its assets to generate profits.

Question 12

ROI can be viewed as
A)A variance.
B)An absolute measure of return.
C)A rate of return.
D)A dollar amount of return.

Accepted Answer

ROI (Return on Investment) is a rate of return, calculated by dividing the net profit or gain from an investment by the cost of the investment. It is expressed as a percentage or ratio. Therefore, option C is the best answer. Options A, B, and D are incorrect as ROI is not a variance, an absolute measure or a dollar amount of return.

Question 13

The DuPont model for calculating ROI contains which of the following components?
A)Margin
B)Asset turnover
C)Both margin and asset turnover.
D)Neither margin nor asset turnover.

Accepted Answer

The DuPont model for calculating ROI contains both margin and asset turnover. The formula for DuPont model is ROI = Margin x Asset Turnover. Therefore, both components are necessary to calculate ROI using this model.

Question 14

The return on investment measures
A)Actual costs against budgeted costs.
B)The rate of return generated by an investment in assets.
C)The dollar amount of segment margin over operating income.
D)None of these ans choices are correct.

Accepted Answer

The return on investment (ROI) measures the rate of return generated by an investment in assets. It helps investors and businesses evaluate the efficiency of their investments and determine whether the investment produced a profit or a loss. Option A is incorrect as actual costs against budgeted costs do not provide a measure of return. Option C is incorrect as segment margin over operating income is not related to ROI. Option D is incorrect as one of the answer choices must be correct.

Question 15

An investment center manager should be evaluated by
A)Examination of actual costs against budgeted costs.
B)A review of both revenues and expenses,with a focus on operating income.
C)How well assets have been used to generate income.
D)None of these ans choices are correct.

Accepted Answer

How well assets have been used to generate income is a key measure of an investment center manager's performance.

Question 16

A cost center manager should be evaluated by
A)Examination of actual costs against budgeted costs.
B)A review of both revenues and expenses,with a focus on operating income.
C)How well assets have been used to generate income.
D)None of these ans choices are correct.

Accepted Answer

A cost center manager's primary responsibility is to manage expenses and ensure that they remain within budgeted costs. Therefore, it is appropriate to evaluate the manager's performance by examining actual costs against budgeted costs. Evaluating revenues and operating income would be more appropriate for a profit center manager, and evaluating asset utilization would be more appropriate for a capital investment manager.

Question 17

In the Dupont Model for calculating ROI,which of the following components appears on both the margin side of the expression and the asset turnover side?
A)Operating income
B)Sales revenue
C)Average operating assets
D)Segment margin

Accepted Answer

Sales revenue is included on both the margin side and the asset turnover side of the Dupont Model formula, as it is a key component in calculating both the profit margin and asset turnover ratios. Operating income and segment margin appear only on the margin side, while average operating assets appear only on the asset turnover side.

Question 18

If a company desires to increase ROI,it should consider methods that will decrease
A)Sales revenue.
B)Segment margin.
C)Asset turnover.
D)Average operating assets.

Accepted Answer

Average operating assets is used in the ROI calculation as the denominator. Therefore, decreasing the average operating assets will increase the ROI.

Question 19

The Sphinx division of Shepherd Corporation generated division generated net revenues of $12,000,000 and variable expenses of $7,700,000.If common corporate fixed costs were $1,000,000 and the segment margin was $1,300,000,what are the division's direct fixed expenses?
A) $4,300,000
B) $3,000,000
C) $300,000
D) The ans cannot be determined from the information given.

Accepted Answer

The answer of The Sphinx division of Shepherd Corporation generated...

Question 20

The formula for calculating ROI is
A)Operating Income divided by average operating assets.
B)Segment margin divided by average operating assets.
C)Either operating Income divided by average operating assets or segment margin divided by average operating assets.
D)Neither operating Income divided by average operating assets nor segment margin divided by average operating assets.

Accepted Answer

Both operating income divided by average operating assets or segment margin divided by average operating assets can be used to calculate ROI. Both formulas measure the return on the assets used to generate that return. Therefore, either choice would be correct.

Quiz 10: Decentralizing and Performance Evaluation

Bethel Corporation's Ambulance division reported net operating profits of $1,500,000 during the year.The division absorbed common fixed corporate expenses of $900,000.The division's segment margin is

A profit center manager should be evaluated by

Which of the following assets would not \textbf{ not } not be included in average operating assets used to calculate ROI?

The Delta division of Georgia Corporation generated division generated net revenues of $6,000,000 and variable expenses of $3,500,000 during the year.If direct fixed costs were $1,000,000 and the segment margin was $1,500,000,what are the common corporate fixed costs?

Ruhlen Corporation's Small Craft division reported a net operating loss of $2,300,000 in the most recent reporting period.The division absorbed common fixed corporate expenses of $2,500,000.The division's segment margin is

In calculating ROI,the return on investment is based on

The formula for calculating ROI is

In the calculation of ROI,the most common measure for average operating assets is

In the most recent reporting period,Athens Corporation's Legion division generated net revenues of $2,000,000 and variable expenses of $700,000.Direct fixed expenses were $500,000 and common corporate fixed expenses were $250,000.What is the division's segment margin?

The DuPont model for calculating ROI contains which of the following components?

The formula for calculating ROI is

ROI can be viewed as

The DuPont model for calculating ROI contains which of the following components?

The return on investment measures

An investment center manager should be evaluated by

A cost center manager should be evaluated by

In the Dupont Model for calculating ROI,which of the following components appears on both the margin side of the expression and the asset turnover side?

If a company desires to increase ROI,it should consider methods that will decrease

The Sphinx division of Shepherd Corporation generated division generated net revenues of $12,000,000 and variable expenses of $7,700,000.If common corporate fixed costs were $1,000,000 and the segment margin was $1,300,000,what are the division's direct fixed expenses?

The formula for calculating ROI is

Which of the following assets would $\textbf{ not }$ be included in average operating assets used to calculate ROI?