QUESTION 9 Manchester Corporation is considering the use of residual income to measure the performance of its divisions. What major disadvantage of this method should the company consider before deciding to adopt it? A. Residual income does not measure how effectively the division manager controls costs. B. The minimum required rate of return may eliminate desirable investments. C. This method does not take into account differences in the size of divisions. D. Residual income does not take into account the cost of capital. QUESTION 10 A company that has a profit can increase its return on investment (ROI), assuming other factors remain the same by: A. Increasing sales revenue and operating expenses by the same pound amount. B. Increasing sales revenue and operating expenses by the same percentage. C. Increasing average operating assets and operating expenses by the same pound amount. D. Decreasing average operating assets and sales by the same percentage. QUESTION 11 A company has three departments: Cutting, Assembling and Finishing. The following information about the next month overheads is available: Cutting Assembling Finishing Total Department Department Department Floor area, sq. m. 3,000 5,000 2,000 10,000 Number of employees 20 30 30 80 The company has two common overhead costs that are to be allocated between three departments: the rent of 20,000 per month and cost of the employees' training of 16,000 per month. What is the total amount of rent and training costs allocated to the Cutting Department per month (rounded to the whole number)? O A. 9,200 OB. 6,000 C. 10,000 OD. 8,800