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 the above
2. Which of the following will not result in an increase in return on investment (ROI), assuming other factors
remain the same?
A. A reduction in expenses.
B. An increase in net operating income.
C. An increase in operating assets.
D. An increase in sales.
3. 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.
4. Bonniwell Corporation has two divisions: the Delta Division and the Alpha Division. The Delta Division has
sales of $620,000, variable expenses of $359,600, and traceable fixed expenses of $229,200. The Alpha
Division has sales of $820,000, variable expenses of $541,200, and traceable fixed expenses of $172,900. The
total amount of common fixed expenses not traceable to the individual divisions is $122,000. What is the
company's net operating income?
5. Last year the House of Orange had sales of $826,650, net operating income of $81,000, and operating assets
of $84,000 at the beginning of the year and $90,000 at the end of the year. What was the company's turnover
rounded to the nearest tenth?