81.

 Which of the following is not an advantage of ROI? 

A. It encourages managers of departments with high ROIs to invest in average ROI projects.
B. It encourages managers to pay careful attention to the relationships among sales, expenses,
and investment.
C. It encourages cost efficiency.
D. It discourages excessive investment in operating assets.

82. Which of the following is not a disadvantage of the ROI performance measure? 

A. It encourages managers to focus on the long run rather than the short run.
B. It discourages managers from investing in projects that would decrease divisional ROI but
increase the profitability of the company as a whole.
C. It encourages myopic behavior.
D. All of these are disadvantages of the ROI measure.

83. Figure 12-1.
Dempsey Company provided the following information for last year:

Operating income $86,000

Sales $225,000
Beginning operating assets $390,000
Ending operating assets $420,000

Refer to Figure 12-1. Calculate Dempsey's margin for last year, rounding to two decimal places. 
A. 2.0
B. 0.26
C. 0.38
D. 0.50
E. 0.35
 

84. Figure 12-1.
Dempsey Company provided the following information for last year:

Operating income $86,000

Sales $225,000
Beginning operating assets $390,000
Ending operating assets $420,000
 Refer to Figure 12-1. Dempsey's turnover ratio for last year was 
A. 2.0.
B. 0.46.
C. 0.56.
D. 0.32.
E. 0.10.
 

85. Figure 12-1.
Dempsey Company provided the following information for last year:

Operating income $86,000

Sales $225,000
Beginning operating assets $390,000
Ending operating assets $420,000

Refer to Figure 12-1. Dempsey's return on investment for last year was 
A. 2.0.
B. 0.21.
C. 0.32.
D. 0.50.
E. 0.15.
 

86. Figure 12-5.
The following information pertains to the three divisions of Yang Company:

  Division A Division B Division C

Sales ? ?       1,345,000
Net operating income         48,000       18,000           82,000
Average operating assets       420,000 ? ?
Return on investment ? 15% 20%
Margin 0.2 0.015 ?
Turnover 2.1 ? ?
Target ROI 17% 14% 8%

Refer to Figure 12-5. What are the average operating assets for Division C? 
A. $95,000
B. $410,000
C. $82,000
D. $420,000
 
87. Figure 12-5.
The following information pertains to the three divisions of Yang Company:

  Division A Division B Division C

Sales ? ?       1,345,000
Net operating income         48,000       18,000           82,000
Average operating assets       420,000 ? ?
Return on investment ? 15% 20%
Margin 0.2 0.015 ?
Turnover 2.1 ? ?
Target ROI 17% 14% 8%

Refer to Figure 12-5. What is the turnover for Division C? 

A. 3.28
B. 0.20
C. 6.670
D. 1.500
 

88. Figure 12-5.
The following information pertains to the three divisions of Yang Company:

  Division A Division B Division C

Sales ? ?       1,345,000
Net operating income         48,000       18,000           82,000
Average operating assets       420,000 ? ?
Return on investment ? 15% 20%
Margin 0.2 0.015 ?
Turnover 2.1 ? ?
Target ROI 17% 14% 8%

Refer to Figure 12-5. What are the sales for Division B? 
A. $18,000
B. $1,250,000
C. $1,200,000
D. $208,333
 
89. Figure 12-5.
The following information pertains to the three divisions of Yang Company:

  Division A Division B Division C

Sales ? ?       1,345,000
Net operating income         48,000       18,000           82,000
Average operating assets       420,000 ? ?
Return on investment ? 15% 20%
Margin 0.2 0.015 ?
Turnover 2.1 ? ?
Target ROI 17% 14% 8%

Refer to Figure 12-5. What are the average operating assets for Division B? 
A. $125,000
B. $120,000
C. $18,000
D. $420,000
 

90. Figure 12-2.
The manager of Stock Division projects the following for next year:

Sales $185,000
Operating income $60,000
Operating assets $375,000

The manager can invest in an additional project that would require $40,000 investment in additional assets and would generate
$6,000 of additional income. The company's minimum rate of return is 14%.

Refer to Figure 12-2. What is the residual income for Stock Division without the additional investment? 
A. $40,000
B. $6,000
C. $6,600
D. $6,200
E. $7,500