Management Accounting

Management Accounting - On Segment Margins Store A Sales...

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On Segment Margins Convery - Spring 2011 1 Store A Store B Total Sales $200,000 $100,000 $300,000 Variable expenses 120,000 72,000 192,000 Contribution margin 80,000 28,000 108,000 Traceable fixed expenses 55,000 21,000 76,000 Segment margin 25,000 7,000 32,000 Common fixed expenses 20,000 NOI 12,000
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On Interpreting ROI Convery - Spring 2011 2 Assuming that sales and net income remain the same, a company’s return on investment (ROI) will: A. Increase if its operating assets increase B. Decrease if its operating assets decrease C. Decrease if its turnover increases D. Decrease if its turnover decreases
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On Residual Income When using residual income as a measure of performance, it is not meaningful to compare the residual incomes of divisions of different sizes. A = True B = False Convery - Spring 2011 3
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Net operating income (NOI) is: Sales less: Ø Variable operating expenses/costs Ø Fixed operating expenses/costs Does not include nonoperating income, such as: Ø Investment income (e.g., interest and dividend income) Ø Interest expense Ø Unrealized and realized gains/losses on the Convery - Spring 2011 4
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Management Accounting - On Segment Margins Store A Sales...

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