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Chapter 12 practice problems

Chapter 12 practice problems - Chapter 12 Practice Problems...

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Chapter 12 Practice Problems 1. Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost? A. store manager salaries B. store building depreciation expense C. the cost of corporate advertising aired during the Super Bowl D. all of these Answer: C 2. Which of the following performance measures will decrease if there is an increase in the accounts receivable? A. Choice A B. Choice B C. Choice C D. Choice D Answer: A 3. Return on investment (ROI) is equal to the margin multiplied by: A. sales. B. turnover. C. average operating assets. D. residual income. Answer: B 4. A company that has a profit can increase its return on investment by: A. increasing sales revenue and operating expenses by the same dollar amount. B. increasing average operating assets and operating expenses by the same dollar amount. C. increasing sales revenue and operating expenses by the same percentage. D. decreasing average operating assets and sales by the same percentage. Answer: C

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5. A segment of a business responsible for both revenues and expenses would be called: A. a cost center. B. an investment center. C. a profit center. D. residual income. Answer: C 8. Given the following data: Return on investment (ROI) would be: A. 10% B. 20% C. 16.7% D. 80% ROI = Net operating income Average operating assets = \$5,000 \$25,000 = 20.0% 9. A company had the following results last year: sales, \$700,000; return on investment, 28%; and margin, 8%. The average operating assets last year were: A. \$200,000 B. \$2,450,000 C. \$540,000 D. \$2,500,000 Margin = Net operating income Sales 8.0% = Net operating income \$700,000
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Chapter 12 practice problems - Chapter 12 Practice Problems...

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