Practice test Chap12

Practice test Chap12 - Practice Test Accth 203 –Chapter...

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Unformatted text preview: Practice Test Accth 203 –Chapter 12 1. Residual income is a better measure for performance evaluation of an investment center manager than return on investment because: A) only the gross book value of assets need to be calculated. B) returns do not increase as assets are depreciated. C) the problems associated with measuring the asset base are eliminated. D) desirable investment decisions will not be rejected by divisions that already have a high ROI. 2. Dulce Company recorded for the past year sales of $450,000 and average operating assets of $120,000. What is the margin that Dulce needed to earn in order to achieve an ROI of 15%? A) 4.00%. B) 15.00% C) 3.75%. D) 6.67%. 3. Following is information relating to Kew Co.'s Vale Division last year: Sales ..................................................... $500,000 Variable expenses ................................ 300,000 Traceable fixed expenses ..................... 50,000 Average operating assets...................... 100,000 Minimum required rate of return ......... 6%...
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This note was uploaded on 02/14/2010 for the course ACCT 203 taught by Professor King during the Winter '09 term at Shoreline.

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Practice test Chap12 - Practice Test Accth 203 –Chapter...

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