FINANCE

QUESTION 39

1. Use this information for Train Corporation to answer the questions that follow.

The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:

  Rails Division Locomotive Division Corporate Total
Cost of goods sold $ 47,200 $30,720  
Direct operating expenses 27,200 20,040  
Sales 108,000 78,000  
Interest expense     $ 2,040
General overhead     18,160
Income tax     4,700

The income from operations for the Locomotive Division is

a. $27,240
b. $47,280
c. $57,960
d. $14,790

2 points   

QUESTION 40

1. The Central Division of Nebraska Company has a return on investment of 28% and a profit margin of 14%. What is the investment turnover?

a. 5.0
b. 0.5
c. 0.2
d. 2.0

2 points   

QUESTION 41

1. Use this information for Clydesdale Company to answer the questions that follow.

Clydesdale Company has sales of $4,500,000. It also has invested assets of $2,000,000 and operating expenses of $3,600,000. The company has established a minimum return of 7%.

What is Clydesdale Company’s investment turnover?

a. 1.25
b. 1.4
c. 1.80
d. 2.25

2 points   

QUESTION 42

1. The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations is

a. gross profit
b. profit margin
c. return on investment
d. residual income

2 points   

QUESTION 43

1. Blaser Corporation had $275,000 in invested assets, sales of $330,000, income from operations amounting to $33,000, and a desired minimum return of 7.5%. The return on investment for Blaser Corporation is

a. 12%
b. 7.5%
c. 10%
d. 8.3%

2 points   

QUESTION 44

1. Income from operations for Division H is $220,000, and income from operations before service department charges is $975,000. As a result,

a. total service department charges are $755,000
b. total manufacturing expenses are $565,000
c. direct materials, direct labor, and factory overhead total $565,000
d. total operating expenses are $565,000

2 points   

QUESTION 45

1. What additional information is needed to calculate the return on investment if income from operations is known?

a. sales
b. invested assets
c. residual income
d. direct expenses

2 points   

QUESTION 46

1. The profit margin is the  ratio of

a. sales to invested assets
b. income from operations to invested assets
c. assets to liabilities
d. income from operations to sales

2 points   

QUESTION 47

1. Use this information for Chicks Corporation to answer the questions that follow.

Chicks Corporation had $1,100,000 in invested assets, sales of $1,210,000, income from operations amounting to $302,500, and a desired minimum return of 15%.

The investment turnover for Chicks is

a. 1.3
b. 1.0
c. 1.5
d. 1.1

2 points   

QUESTION 48

1. Use this information for Chacha Company to answer the questions that follow.

Division A of Chacha Company has sales of $140,000, cost of goods sold of $83,000, operating expenses of $43,000, and invested assets of $150,000.

What is the return on investment for Division A?

a. 4.6%
b. 74.6%
c. 99.3%
d. 9.3%

2 points   

QUESTION 49

1. Assume that divisional income from operations amounts to $215,000, and top management has established 15% as the minimum return on divisional assets totaling $1,000,000. The residual income for the division is

a. $635,000
b. $150,000
c. $65,000
d. $215,000

2 points   

QUESTION 50

1. The balanced scorecard measures

a. both financial and nonfinancial information
b. only nonfinancial information
c. external and internal information
d. only financial information

2 points   

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