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Homework answers / question archive / Question 1 3 / 3 pts If operating income is $60,000, average operating assets are $240,000, and the minimum required rate of return is 20%, what is the residual income?    25%    $48,000    40%    $12,000     Question 2 0 / 3 pts In September, the Universal Solutions Division of Mcallister Corporation had average operating assets of $120,000 and net operating income of $12,800

Question 1 3 / 3 pts If operating income is $60,000, average operating assets are $240,000, and the minimum required rate of return is 20%, what is the residual income?    25%    $48,000    40%    $12,000     Question 2 0 / 3 pts In September, the Universal Solutions Division of Mcallister Corporation had average operating assets of $120,000 and net operating income of $12,800

Accounting

Question 1

3 / 3 pts

If operating income is $60,000, average operating assets are $240,000, and the minimum required rate of return is 20%, what is the residual income?

  

25%

  

$48,000

  

40%

  

$12,000

 

 

Question 2

0 / 3 pts

In September, the Universal Solutions Division of Mcallister Corporation had average operating assets of $120,000 and net operating income of $12,800. The company uses residual income, with a cost of capital of 12%, to evaluate the performance of its divisions. What was the Universal Solutions Division's residual income in September?

  

$(1,600)

  

$1,536

  

$1,600

  

$(1,536)

 

 

Question 3

3 / 3 pts

In a make-or-buy decision, relevant costs include:

  

fixed selling and administrative expenses

  

avoidable fixed costs

  

unavoidable fixed costs

  

fixed factory overhead costs applied to products

 

 

Question 4

3 / 3 pts

When a multi-product factory operates at full capacity, decisions must be made about which products to emphasize. In making such decisions, products should be ranked based on:

  

contribution margin per unit of the constraining resource

  

unit sales volume

  

selling price per unit

  

contribution margin per unit

 

 

Question 5

3 / 3 pts

Two or more products produced from a common input are called:

 

joint products.

  

sunk costs.

  

common costs.

  

joint costs.

 

 

Question 6

0 / 3 pts

Fabio Corporation is considering eliminating a department that has a contribution margin of $30,000 and $60,000 in fixed costs. Of the fixed costs, $15,000 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

  

a decrease of $15,000.

  

an increase of $15,000.

  

an increase of $30,000.

  

a decrease of $30,000.

 

 

Question 7

3 / 3 pts

The following information relates to next year's projected operating results of the Consumer Division of Xampa Corporation:

 

 Contribution margin       $1,800,000
 Fixed expenses                      2,100,000
 Net operating loss              ($300,000)


If the Consumer Division is eliminated, $1,600,000 of the above fixed expenses could be avoided. What will be the effect on Xampa's profit next year if Consumer Division is eliminated?

  

$300,000 decrease

 

$200,000 decrease

  

$300,000 increase

 

No effect

 

 

Question 8

3 / 3 pts

Vanikord Corporation currently has two divisions which had the following operating results for last year:

  Cork
Division
Rubber
Division
Sales $500,000 $400,000
Variable costs    210,000 300,000
Contribution margin   290,000 100,000
Traceable fixed costs   130,000 70,000
Segment margin   160,000 30,000
Allocated common corporate fixed costs     90,000 50,000
Net operating income (loss) $70,000 ($20,000)

Because the Rubber Division sustained a loss, the president of Vanikoro is considering the elimination of this division. All of the division's traceable fixed costs could be avoided if the division was dropped. None of the allocated common corporate fixed costs could be avoided. If the Rubber Division was dropped at the beginning of last year, how much higher or lower would Vanikoro's total net operating income have been for the year?

  

$50,000 lower

  

$50,000 higher

  

$20,000 higher

 

$30,000 lower

 

 

Question 9

3 / 3 pts

If net operating income is $70,000, average operating assets are $250,000, and the cost of capital is 16%, what is the residual income?

  

$30,000

  

$11,200

  

$110,000

  

$40,000

 

 

Question 10

0 / 3 pts

Lumsden Inc. has a $1,200,000 investment opportunity with the following characteristics:

 
Sales                                                     $ 2,400,000  
Contribution margin ratio          30 % of sales
Fixed expenses                              $ 600,000  

The company's cost of capital is 7%. The residual income for this year's investment opportunity is closest to:

  

$120,000

   

$36,000

   

$0

   

$84,000

 

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