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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
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)
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
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
3 / 3 pts
Two or more products produced from a common input are called:
joint products.
sunk costs.
common costs.
joint costs.
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.
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
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
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
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
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%
Correct!
$12,000
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?
Correct answer
$(1,600)
$1,536
You Answered
$1,600
$(1,536)
3 / 3 pts
In a make-or-buy decision, relevant costs include:
fixed selling and administrative expenses
Correct!
avoidable fixed costs
unavoidable fixed costs
fixed factory overhead costs applied to products
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:
Correct!
contribution margin per unit of the constraining resource
unit sales volume
selling price per unit
contribution margin per unit
3 / 3 pts
Two or more products produced from a common input are called:
Correct!
joint products.
sunk costs.
common costs.
joint costs.
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:
Correct answer
a decrease of $15,000.
You Answered
an increase of $15,000.
an increase of $30,000.
a decrease of $30,000.
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
Correct!
$200,000 decrease
$300,000 increase
No effect
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
Correct!
$30,000 lower
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?
Correct!
$30,000
$11,200
$110,000
$40,000
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
Correct answer
$36,000
$0
You Answered
$84,000
