133) Dacker Products is a division of a major corporation. The following data are for the most
recent year of operations:
Sales
$
36,480,000
Net operating income
$
2,808,960
Average operating assets
$
8,000,000
The company’s minimum required rate of return
16
%
–
The division’s return on investment (ROI) is closest to:
A) 6.3%
B) 2.7%
C) 35.1%
D) 160.1%
134) Dacker Products is a division of a major corporation. The following data are for the most
recent year of operations:
Sales
$
36,480,000
Net operating income
$
2,808,960
Average operating assets
$
8,000,000
The company’s minimum required rate of return
16
%
–
The division’s residual income is closest to:
A) $2,808,960
B) $4,088,960
C) $(3,027,840)
D) $1,528,960
Net operating income
$
Minimum required return ($8,000,000 × 16%)
Residual income
$
–
135) Cabell Products is a division of a major corporation. Last year the division had total sales of
$25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000.
The company’s minimum required rate of return is 10%.
The division’s margin is closest to:
A) 23.7%
B) 7.6%
C) 32.1%
D) 31.3%
136) Cabell Products is a division of a major corporation. Last year the division had total sales of
$25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000.
The company’s minimum required rate of return is 10%.
The division’s turnover is closest to:
A) 13.16
B) 4.22
C) 0.32
D) 3.20
137) Cabell Products is a division of a major corporation. Last year the division had total sales of
$25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000.
The company’s minimum required rate of return is 10%.
The division’s return on investment (ROI) is closest to:
A) 135.5%
B) 6.1%
C) 32.1%
D) 2.4%
138) Cabell Products is a division of a major corporation. Last year the division had total sales of
$25,320,000, net operating income of $1,924,320, and average operating assets of $6,000,000.
The company’s minimum required rate of return is 10%.
The division’s residual income is closest to:
A) $1,324,320
B) $2,524,320
C) $1,924,320
D) $(607,680)
139) The following data are for the Akron Division of Consolidated Rubber, Inc.:
Sales
$
750,000
Net operating income
$
45,000
Average operating assets
$
250,000
Stockholders’ equity
$
75,000
Residual income
$
15,000
–
For the past year, the return on investment was:
A) 6%
B) 30%
C) 18%
D) 26%
140) The following data are for the Akron Division of Consolidated Rubber, Inc.:
Sales
$
750,000
Net operating income
$
45,000
Average operating assets
$
250,000
Stockholders’ equity
$
75,000
Residual income
$
15,000
–
For the past year, the margin used in ROI calculations was:
A) 6.00%
B) 8.67%
C) 10.00%
D) 8.00%
141) The following data are for the Akron Division of Consolidated Rubber, Inc.:
Sales
$
750,000
Net operating income
$
45,000
Average operating assets
$
250,000
Stockholders’ equity
$
75,000
Residual income
$
15,000
–
For the past year, the turnover used in ROI calculations was:
A) 1.4
B) 3.3
C) 10.0
D) 3.0
142) The following data are for the Akron Division of Consolidated Rubber, Inc.:
Sales
$
750,000
Net operating income
$
45,000
Average operating assets
$
250,000
Stockholders’ equity
$
75,000
Residual income
$
15,000
–
For the past year, the minimum required rate of return was:
A) 30%
B) 12%
C) 15%
D) 6%
143) The Hum Division of the Ho Company reported the following data for last year:
Net operating income
$
150,000
Interest expense
$
50,000
Tax expense
$
30,000
Stockholders’ equity
$
200,000
Average operating assets
$
600,000
Minimum required rate of return
12
%
–
The residual income for the Hum Division last year was:
A) $126,000
B) $46,000
C) $78,000
D) $22,000
144) The Hum Division of the Ho Company reported the following data for last year:
Net operating income
$
150,000
Interest expense
$
50,000
Tax expense
$
30,000
Stockholders’ equity
$
200,000
Average operating assets
$
600,000
Minimum required rate of return
12
%
–
The return on investment (ROI) last year for the Hum Division was:
A) 75%
B) 25%
C) 35%
D) 12%
145) The West Division of Cecchetti Corporation had average operating assets of $240,000 and
net operating income of $42,200 in August. The minimum required rate of return for
performance evaluation purposes is 19%.
What was the West Division’s minimum required return in August?
A) $45,600
B) $42,200
C) $53,618
D) $8,018
146) The West Division of Cecchetti Corporation had average operating assets of $240,000 and
net operating income of $42,200 in August. The minimum required rate of return for
performance evaluation purposes is 19%.
What was the West Division’s residual income in August?
A) $(8,018)
B) $3,400
C) $(3,400)
D) $8,018
147) The Consumer Products Division of Goich Corporation had average operating assets of
$800,000 and net operating income of $81,300 in May. The minimum required rate of return for
performance evaluation purposes is 10%.
What was the Consumer Products Division’s minimum required return in May?
A) $81,300
B) $8,130
C) $88,130
D) $80,000
148) The Consumer Products Division of Goich Corporation had average operating assets of
$800,000 and net operating income of $81,300 in May. The minimum required rate of return for
performance evaluation purposes is 10%.
What was the Consumer Products Division’s residual income in May?
A) $(1,300)
B) $8,130
C) $1,300
D) $(8,130)
149) Shrewsbury Inc. reported the following results from last year’s operations:
Sales
$
7,200,000
Variable expenses
5,400,000
Contribution margin
1,800,000
Fixed expenses
1,296,000
Net operating income
$
504,000
Average operating assets
$
4,000,000
At the beginning of this year, the company has a $800,000 investment opportunity with the
following characteristics:
Sales
$
2,480,000
Contribution margin ratio
40
% of sales
Fixed expenses
$
868,000
The company’s minimum required rate of return is 14%.
Last year’s residual income was closest to:
A) $504,000
B) ($56,000)
C) $544,000
D) ($475,200)
Average operating assets
$
4,000,000
Net operating income
$
504,000
Minimum required return ($4,000,000 × 14%)
460,000
Residual income
$
)
150) Shrewsbury Inc. reported the following results from last year’s operations:
Sales
$
7,200,000
Variable expenses
5,400,000
Contribution margin
1,800,000
Fixed expenses
1,296,000
Net operating income
$
504,000
Average operating assets
$
4,000,000
At the beginning of this year, the company has a $800,000 investment opportunity with the
following characteristics:
Sales
$
2,480,000
Contribution margin ratio
40
% of sales
Fixed expenses
$
868,000
The company’s minimum required rate of return is 14%.
The residual income for this year’s investment opportunity when considered alone is closest to:
A) $124,000
B) $12,000
C) $0
D) $108,800
Contribution margin (40% × $2,480,000)
$
992,000
Fixed expenses
868,000
Net operating income
$
124,000
Average operating assets
$
800,000
Net operating income
$
124,000
Minimum required return ($800,000 × 14%)
112,000
Residual income
$
151) Shrewsbury Inc. reported the following results from last year’s operations:
Sales
$
7,200,000
Variable expenses
5,400,000
Contribution margin
1,800,000
Fixed expenses
1,296,000
Net operating income
$
504,000
Average operating assets
$
4,000,000
–
At the beginning of this year, the company has a $800,000 investment opportunity with the
following characteristics:
Sales
$
2,480,000
Contribution margin ratio
40
% of sales
Fixed expenses
$
868,000
–
The company’s minimum required rate of return is 14%.
If the company pursues the investment opportunity, this year’s combined residual income for the
entire company will be closest to:
A) $23,200
B) ($44,000)
C) $628,000
D) $652,800
152) Rotan Corporation keeps careful track of the time required to fill orders. The times recorded
for a particular order appear below:
Hours
Move time
3.2
Wait time
10.9
Queue time
5.1
Process time
1.2
Inspection time
0.2
–
The delivery cycle time was:
A) 19.2 hours
B) 20.6 hours
C) 8.3 hours
D) 3.2 hours