1.

Given the following: Sales = $800,000; Net operating income = $64,000; ROI = 12%. What is "Turnover"?

0.67.

1.5.

2.0.

2.5.

None of the above.

2.

Residual income would be used to evaluate the performance of a/an__________center manager.

profit.

revenue.

cost.

investment.

3.

If the return on investment for a division is 12% and the minimum required rate of return is 15%, the residual income would be___________.

negative.

positive.

zero.

4.

Consider the following for Division A:

Sales = $7,000,000; Average operating assets = $2,500,000; Net operating income = $475,000; Minimum required rate of return = 15%.

Assume that the Division A manager is presented with an investment opportunity that would yield a rate of return of 17%. Determine whether the Division A manager would accept or reject the opportunity under the following two scenarios: 1) The company evaluates its Division managers based on return on investment (ROI);

2) The company evaluates its Division managers based on residual income.

Reject under either Scenario.

Accept under Scenario 1 and reject under Scenario 2.

Reject under Scenario 1 and accept under Scenario 2.

Accept under either Scenario.

5.

Consider the following for Division A:

Sales = $7,000,000; Average operating assets = $2,500,000; Net operating income = $475,000; Minimum required rate of return = 15%.

What is the residual income?

$100,000.

$375,000.

$475,000.

$575,000.

None of the above.

6.

Consider the following for Division A:

Sales = $7,000,000; Average operating assets = $2,500,000; Net operating income = $475,000; Minimum required rate of return = 15%.

What is the return on investment (ROI)?

4%.

6.8%.

15%.

19%.

None of the above.