False,False,True,True,TrueTrue,False,True,False,TrueAll Statements are true.All Statements are false Statement 1: Department A has Operating profit of 30,00o, Operating assets of100,000 „Imputed interest of 12,000. Return on ínvestment is 30% and Residualincome is 18,000 .An additional investment of P10,000 is offered that will increaseoperating income by P1,400. Department A manager would resist the new investmentif they were to be judged on RI. but would welcome the investment if they were judgedaccording to ROI since the there would be decrease of P200 in residual income fromthe investment, and an increase of 1.5% in ROI.Statement 2: If transfer príces are to be based on cost, then the costs should be actualcosts rather than standard costs.Statement 3: A segment margin is computed by deducting variable and traceable fixedexpenses from the sales of a segment.Statement +: Labor turnover rate, Percentage of revenue generated by new productsand services and Average tíme taken to develop new products and services aremeasures under innovation and learning.Statement 5: Responsibility accounting functions most effectively in decentralizedorganízations.

Statement 1 is false : Interest rate is 12% (Imputed interest / Existing investment ie…

Answered: False,False,True,True,True…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Golden Goodness (GG) has an investment center that had the following data: Operating Income $28,000 Sales $350,000 Invested assets $175,000 PMB has set a minimum acceptable rate of return at 14%. Using the information, answer the following questions. You must include what type of number it is (%, $, etc.) Part A: What is the residual income? Part B: Show calcualtions on how you got answer
Which of the choices best describe the statements below? Statement 1: Department A has operating profit of 30000, operating assets of 100000, imputed interest of 12000, return on investment is 30% and residual income of 18000. An additional investment of 10000 is offered that will increase operating income by 1400. Department A manager would resist the new investment if they were to be judged on Residual Income, but would welcome the investment if they were judged according to ROI since there would be decrease of 200 in residual income from the investment and an increase of 1.5% in ROI Statement 2: If transfer prices are to be based on cost, then the costs should be actual costs rather than standard costs Statement 3: A segment margin is computed by deducting variable and traceable fixed expenses from the sales of a segment Statement 4: Labor turnover rate. Percentage of revenue generated by new products and services and Average time taken to develop new products and services are…
Use the following information to answer the questions. Company X $ 12,480,000 $ 3,120,000 561,600 8.00% Company Y $ 28,480,000 $ 7,120,000 2$ Company Z $ 20,480,000 $ 5,120,000 532,480 Sales Average operating assets Net operating income Minimum required rate of return $ 512,640 8.50% 10.40% Required: 1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each company. 3. Each company is presented with an investment opportunity that would yield a 9% rate of return. a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment opportunity. b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the investment opportunity. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req ЗA Req 3B Each company is presented with an investment…
Deuk Seon have the following investment centers. Several items are missing from the following table of rate of return on investment and residual income. Determine the missing items, identifying each item by the appropriate letter. Department Invested Assets Income from Operations Rate of Return on Investment Min. Rate of Return Min. Amt. of Income from Operations Residual Income Taek (a) (b) (c) 16% P128,000 P10,000 Jung Hwan P850,000 P153,000 (d) 12% (e) (f) Sun woo P825,000 (g) 20% (h) (i) P24,000 Dong Ryong (j) P129,000 24% (k) P60,000 (l) (a) Determine the missing items, identifying each by number. (b) Which division is most profitable in terms of income from operations? (c) Which division is most profitable in terms of rate of return on investment?
A company has three investment alternatives. The alternatives have similar economic lives. The following data is available for each alternative Investment A Investment B Investment $100,000 $100,000 Annual net income $31,000 $18,000 Residual value of investment $10,000 $20,000 Assuming the company can select only one investment, which investment would be selected under ROI analysis? ROI on Investment A ROI on Investment B
Use the following information to answer the questions. Company X $ 12,480,000 $ 3,120,000 $ Company Y $ 28,480,000 $ 7,120,000 512,640 8.50% Company Z $ 20,480,000 $ 5,120,000 532,480 10.40% Sales Average operating assets Net operating income Minimum required rate of return 561,600 8.00% Required: 1. Compute the return on investment (ROI) for each company using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each company. 3. Each company is presented with an investment opportunity that would yield a 9% rate of return. a. Assume performance is measured based on ROI. Indicate whether each company will likely accept or reject the investment opportunity. b. Assume performance is measured based on residual income. Indicate whether each company will likely accept or reject the investment opportunity. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Reg ЗA Req 3B Compute the return on investment (ROI) for each company…
Jones Corp. had the following results for the period just ended; Sales P 2.0 million Net Income P 0.5 million; Capital Investment P 1.0 million To arrive at the return on investment, the following should be used: a. ROI = (20/20) X (20/5) c. ROI = (10/20) X (20/5) b. ROI = (20/10) X (5/20) d. ROI = (10/20) X (5/20)
4. Return on Investment, Residual Income & ROI Pricing For each of the following independent cases, the minimum desired Return on Investment (ROI) is 20%. Division LBM P 700,000 P 42,000 (5) (6) (7). (8) P 22,000 Sales Operating Income Operating Assets Margin Turnover Return on Investments Residual Income Division Lugaw P 400,000 (1). (2) 15% (3). 30% (4). Division Lugaw Unit selling price: P 20 Total fixed costs: P 100,000 Division LBM • Unit selling price: P 700 Total fixed costs: P 258,000 REQUIRED: 1. Compute for each division's missing items (1) to (8). 2. How many more units shall be sold by Lugaw to achieve a 40% ROI? 3. How much increase in selling price will allow LBM to reach 50% ROI from its current unit sales?
The following information is provided. Project Income Investment A P33,000 P300,000 B P56,250 P750,000 C P27,500 P550,000 Assume the division's current ROI is 10% and the firms minimum required rate of return is 7%. If you were the president of the company, which projects would you want the division manager to accept? a. A, B and C b. A and C c. A and B d. A only e. B only.
Q4. As a manager you are presented with a $10,000 investment opportunity that will yield $1,600 in additional operating income. The manager’s division is currently operating at 17% ROI. If the company’s minimum acceptable return is 15%, what will happen to the company’s residual income if the investment is accepted by the manager? A. It will increase by $1,500 B. It will increase by $1,600 C. It will increase by $100 D. It will increase by $200 Answer: _________
Top management is unhappy with the investment center's return on investment (ROD) It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action 1 2 3 (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%) Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $160,000 Reduce average operating assets by 3% Return on Investment Action 1 (b) Using the ROI formula, compute the ROI under each of the proposed courses of action. (Round ROI to 2 decimal places, eg. 1.57%) Action 21 Action 31 Save for Later % Return on investment Attempts: 0 of 1 used Submit Answer P
A company has operating income of $300,000, revenues of $1,500,000, total assets of $2,000,000 and an ROI of 15%. To improve the ROI, to increase ROI to 20%, which of the following investment turnovers would need to be achieved? A. .75 B.1.5 C. 2 D.1

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False,False,True,True,True True,False,True,False,True All Statements are true. All Statements are false