40. Summer Company\'s East Division generates $900,000 in sales and $100,000 in

Question

40. Summer Company's East Division generates $900,000 in sales and $100,000 in operating income. The company had $400,000 in assets at the beginning of the year and $450,000 at the end of the year. What is the division's return on investment for the year b. 23.5% 10.0% 42.5% c. d. 41. Nakano Corporation's Southeast Division operates as an investment center. Bill Black, the division's manager, has set a 15% required minimum rate of return. Black is considering investing in computerized manufacturing equipment with a cost of $220,000. The equipment is expected to generate $65,000 in additional operating income. What is the equipment's residual income? a. $65,000 $32,000 $42,000 $33,000 42. Portland Company's Home Appliance Division's segment margin as a percentage of net sales is 12% for the current reporting period. The division has net sales revenue of $2,500,000. Operating assets were $800,000 at the beginning of the period and $1,200,000 at the end. What is the division's asset turnover? a. 2.08 b. 2.8 c. 2.5 d. 3.13 43. When using the balanced scorecard to monitor performance, the internal business processes perspective answers which of the following questions? Are we developing employees and providing technologies that facilitate change and improvement? Are we improving our business processes in order to deliver maximum value to our customers? a. b. c. Are we meeting our stakeholders' expectations? d. Are we growing in a manner to be competitive in the industry? 44. Direct materials variances, direct labor variances, return on investment, residual income and EVA are performance measures that are Quantitative Lagging a. b. C. d. Yes No Yes No Yes 0 No Yes

Explanation / Answer

SOLUTION

Question - 40

Return on investment = 23.5%

Return on investment = Net operating income / Average investment

Average investment = (Assets in the beginning + Aseets at the end) / 2

= ($400,000+$450,000) / 2

= $950,000 / 2 = $425,000

Return on investment = $100,000 / $425,000 = 23.5%

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