7) Which of the following performance measures will increase if inventory decreases and all else remains the same? Return on Investment Residual Income A Yes B) No Yes DNo Yes Yes No No A) Choice A B) Choice B C) Choice C D) Choice D 8) Worsell Inc. reported the following results from last year's operations: Sales NI1,000,000 Variable expenses 1.200,000 Contribution margin 1.800.000 Fixed expenses IP 40,000 Nel operating income 440,000 Average operating assets. 5,000,000 The company's minimum required rate of return is 10%. Last year's residual income was closest to: A) $ 440,000 B) S 500,000 C) ($ 638,000) D) ($ 60,000) E) S 360,000 9) Gordon Corporation produces 1,000 units of a part per year which are used in the assembly of one of its products. The unit cost of producing these parts is: Variable manufacturing Pined manufacturing cost Total manufacturing con The part can be purchased from an outside supplier at $20 per unit. If the part is purchased from the outside supplier, two thirds of the total fixed costs incurred in producing the part can be avoided. The annual financial advantage (disadvantage) for the company as a result of buying the part from the outside supplier would be: A) S 3,000 B) (S 1,000) C) $ 7,000 D) ($ 5,000) E) None of the above 10) Vanik Corporation currently has two divisions which had the following operating results for last year: T Sales Variable costs Contributionary Traceable fixed costs Seyme margin Allocated common corporate fixed Net operating income (less) Cork Division 600.000 250,000 350.000 100.000 I 190.000 0.000 IS 110.000 Rubber Division 350.000 220,000 130.000 110.000 20.000 45.000 25.000 ll Because the Rubber Division sustained a loss, the president of Vanik is considering the elimination of this division. All of the division's traceable fixed costs could be avoided if the division was dropped. None of the allocated common corporate fixed costs could be avoided. If the Rubber Division was dropped at the beginning of last year, the financial advantage (disadvantage) to the company for the year would have been A) ($ 20,000) B) S 20,000 C) $ 25,000 D) ($ 25,000) E) None of the above