Dickonson Products is a division of a major corporation. The following data are

Question

Dickonson Products is a division of a major corporation. The following data are for the last year of operations:

3. The division's margin is closest to:
A. 26.4%
B. 10.0%
C. 2.4%
D. 24.0%

5. The division's return on investment (ROI) is closest to:
A. 0.2%
B. 41.6%
C. 10.0%
D. 1.9%

2. Which of the following three statements are correct?

I. A profit center has control over both cost and revenue.
II. An investment center has control over invested funds, but not over costs and revenue.
III. A cost center has no control over sales.
A. Only I
B. Only II
C. Only I and III
D. Only I and II

Explanation / Answer

3. C 2.4% $399,360 / $16,640,000 = 0.024 = 2.4 %

The gross margin percentage G is the profit P divided by the selling price or revenue R. [G = P / R = ( R - C ) / R]

4. C 10% $399,360 / $4,000,000 = .09984 = 9.98 or 10%

ROI = income/investment (investment = average operating assets)

2.A. D Only I and II

A cost center is a unit that does not generate revenue. A revenue center has responsibility for generating revenues, and in most cases will be the same as a profit center, as all units have some level of costs. An investment center is usually found at higher levels in an organization where a unit manager has the responsibility of generating returns on investment capital. http://www.chegg.com/homework-help/definitions/cost-revenue-profit-and-investment-centers-37

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