University of Phoenix - ACCT 505 Week 8, Final Exam 3.

ACCT 505 Final Exam 1. A good example of a common cost which normally could not be assigned to products on a segmented income statement except on an arbitrary basis would be: A) product advertising outlays. B) salary of a corporation president. C) direct materials. D) the product manager's salary. 2.Turnover is computed by dividing average operating assets into: A) invested capital. B) total assets. C) net operating income. D) sales. 3.A segment of a business responsible for both revenues & expenses would be called: A) a cost center. B) an investment center. C) a profit center. D) residual income. 4.All other things being equal, if a division's traceable fixed expenses increase: A) the division's contribution margin ratio will decrease. B) the division's segment margin ratio will remain the same. C) the division's segment margin will decrease. D) the overall company profit will remain the same. 5.In computing the margin in a ROI analysis, which of the following is used? A) Sales in the denominator B) Net operating income in the denominator C) Average operating assets in the denominator D) Residual income in the denominator 6.Net operating income is defined as: A) sales minus variable expenses. B) sales minus variable expenses & traceable fixed expenses. C) contribution margin minus traceable & common fixed expenses. D) net income plus interest & taxes. 7.Suppose a manager is to be measured by residual income. Which of the following will not result in an increase in the residual income figure for this manager, assuming other factors remain constant? A) An increase in sales. B) An increase in the minimum required rate of return. C) A decrease in expenses. D) A decrease in operating assets. 8. During April, Division D of Carney Company had a segment margin ratio of 15%, a variable expense ratio of 60% of sales, & traceable fixed expenses of $15,000. Division D's sales were closest to: A) $100,000. B) $60,000. C) $33,333. D) $22,500. 9. Cable Company had the following results for the year just ended: Net operating income $2,500 Turnover 4 Return on investment 20% Cable Company's average operating assets during the year were: A) $50,000. B) $200,000. C) $12,500. D) $10,000. Use the following to answer question 10: Ieso Company has two stores: J & K. During November, Ieso Company reported a net income of $30,000 & sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses are $60,000 in Store J, & $40,000 in Store K. 10.The segment margin ratio in Store J was: A) 16%. B) 24%. C) 40%. D) 60%. Use the following to answer questions 11-12: The following information is available on Company A: Sales $900,000 Net operating income 36,000 Stockholders' equity 100,000 Average operating assets 180,000 Minimum required rate of return 15%