- A manager of a profit center is most likely to be evaluated using a:
- Return on investment (ROI) could be calculated using which of the following formulas?
- Margin is calculated using which of the following formulas?
- Assume a company reported the following results:
| Sales | $ 400,000 |
| Variable expenses | 260,000 |
| Contribution margin | 140,000 |
| Fixed expenses | 96,000 |
| Net operating income | $ 44,000 |
| Average operating assets | $ 350,000 |
The margin is closest to:
- Assume a company had net operating income of $300,000, sales of $1,500,000, average operating assets of $1,000,000, and a minimum required rate of return on average operating assets of 14.50%. The company’s residual income is closest to:
- Assume a company had net operating income of $300,000, sales of $1,500,000, residual income of $130,000, and a minimum required rate of return on average operating assets of 11.25%. The company’s average operating assets are closest to:
- Incremental costs are always:
- Assume a merchandising company is deciding whether to keep or drop one of the many product lines that it sells at its retail store location. Which of the following would be irrelevant to the decision?
- Assume a company manufactures many products, one of which normally sells for $48 per unit. The company’s accounting system reports the following unit product cost for this product:
| Per Unit | |
| Direct materials | $ 18 |
| Direct labor | 12 |
| Manufacturing overhead | 10 |
| Total cost | $ 40 |
The company estimates that $3 of its manufacturing overhead varies with respect to the number of units produced. The remainder of its overhead is fixed and unaffected by the volume of units produced within the relevant range.
A customer has approached the company with an offer to buy 300 units of a customized version of the product mentioned above for $39. The company can fulfill this order using existing manufacturing capacity. To accommodate the customer’s desired product design, the company would incur additional direct materials cost per unit of $3. It would also have to buy a special tool for $400 that has no other use or resale value after the special order is completed. Assuming that accepting this order will not have any effect on sales to other customers, what is the financial advantage (disadvantage) of accepting the special order?
- Assume a company has two products—A and B—that emerge from a joint process. Product A has been allocated $24,000 of the total joint costs of $48,000. A total of 2,000 units of Product A are produced from the joint process. Product A can be sold at the split-off point for $16 per unit, or it can be processed further for an additional total cost of $14,900 and then sold for $25 per unit. What is the financial advantage (disadvantage) of further processing Product A?