1/ The use of return on investment as a performance measure may lead managers to

Question

1/ The use of return on investment as a performance measure may lead managers to make decisions that are not in the best interests of the company as a whole.

True False

2/ Residual income is the net operating income that an investment center earns above the minimum required return on the investment in operating assets. )

True False

3/ Residual income should not be used to evaluate a cost center

True False

4/ Which of the following statements provide(s) an argument in favor of including only a plant's net book value rather than gross book value as part of operating assets in the ROI computation?

I. Net book value is consistent with how plant and equipment items are reported on a balance sheet. II. Net book value is consistent with the computation of net operating income, which includes depreciation as an operating expense.

III. Net book value allows ROI to decrease over time as assets get older.

a) Only I and III.

b) Only I and II.

c) Only III.

d) Only I

Bamba Corporation's cost formula for its selling and administrative expense is $47,900 per month plus $52 per unit. For the month of April, the company planned for activity of 6,000 units, but the actual level of activity was 5,960 units. The actual selling and administrative expense for the month was $364,490.

5/ The selling and administrative expense in the flexible budget for April would be around: ?

6/ The selling and administrative expense in the planning budget for April would be?

7/ The spending varaince for selling and administrative expense in April would be?

8/ The activity variance for selling and administrative expense in April would be?

Explanation / Answer

f t t f t t

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.