1. The Consumer Products Division of Goich Corporation had average operating assets of $800,000 and net operating income of $81,300 in May. The minimum required rate of return for performance evaluation purposes is 10%
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AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy
3. Azuki Corporation operates in two sales territories, urban and rural. Shown below is last year's income statement segmented by territory: Azuki's common fixed expenses were $25,000 last year. Reference: 12-3
If urban sales were 10% higher last year, by approximately how much would Azuki's net operating income have increased? (Assume no change in the revenue or cost structure.) A) $4,400 B) $6,400 C) $11,200 D) $32,000 Feedback: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Medium
4. Deanda Products is a division of a major corporation. The following data are for the last year of operations: Reference: 12-14 The division's turnover is closest to: A) 4.09 B) 0.16 C) 25.00 D) 3.51 Feedback: Turnover = Sales ÷ Average operating assets = $28,630,000 ÷ $7,000,000 = 4.09 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
5. Beade Industries is a division of a major corporation. Last year the division had total sales of $16,760,000, net operating income of $770,960, and average operating assets of $4,000,000. Reference: 12-17
The division's margin is closest to: A) 28.5% B) 23.9% C) 4.6% D) 19.3% Feedback: Margin = Net operating income ÷ Sales = $770,960 ÷ $16,760,000 = 4.6% AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
6. Azuki Corporation operates in two sales territories, urban and rural. Shown below is last year's income statement segmented by territory: Azuki's common fixed expenses were $25,000 last year. Reference: 12-3
What was Azuki Corporation's overall net operating income for last year? A) $33,000 B) $45,000 C) $58,000 D) $83,000 Feedback: AACSB: Analytic AICPA BB: Critical Thinking LO: 1 Level: Easy
7. Cecille Products is a division of a major corporation. Last year the division had total sales of $7,940,000, net operating income of $254,080, and average operating assets of $2,000,000. The company's minimum required rate of return is 12%. Reference: 12-13
The division's return on investment (ROI) is closest to: A) 2.6% B) 12.7% C) 0.4% D) 50.4% Feedback: ROI = Net operating income ÷ Average operating assets = $254,080 ÷ $2,000,000 = 12.7% AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
8. Last year the Uptown Division of Gorcen Enterprises had sales of $300,000 and a net operating income of $24,000. The average operating assets at Uptown last year amounted to $120,000. Reference: 12-15
Last year at Uptown the return on investment was: A) 8% B) 12% C) 20% D) 40% Feedback: ROI = Net operating income ÷ Average operating assets = $24,000 ÷ $120,000 = 20% AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
9. The West Division of Cecchetti Corporation had average operating assets of $240,000 and net operating income of $42,200 in August. The minimum required rate of return for performance evaluation purposes is 19%. Reference: 12-18
What was the West Division's minimum required return in August? A) $45,600 B) $42,200 C) $53,618 D) $8,018 Feedback: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy
10. Deanda Products is a division of a major corporation. The following data are for the last year of operations: Reference: 12-14 The division's margin is closest to: A) 4.0% B) 16.4% C) 24.4% D) 28.4% Feedback: Margin = Net operating income ÷ Sales = $1,145,200 ÷ $28,630,000 = 4.0% AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
11. Ahartz Industries is a division of a major corporation. Data concerning the most recent year appears below: Reference: 12-16 The division's turnover is closest to: A) 3.20 B) 17.54 C) 0.22 D) 3.91 Feedback: Turnover = Sales ÷ Average operating assets = $7,820,000 ÷ $2,000,000 = 3.91 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
12. Cecille Products is a division of a major corporation. Last year the division had total sales of $7,940,000, net operating income of $254,080, and average operating assets of $2,000,000. The company's minimum required rate of return is 12%. Reference: 12-13
The division's turnover is closest to: A) 0.13 B) 3.52 C) 3.97 D) 31.25 Feedback: Turnover = Sales ÷ Average operating assets = $7,940,000 ÷ $2,000,000 = 3.97 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
13. Tubaugh Corporation has two major business segments—East and West. In December, the East business segment had sales revenues of $690,000, variable expenses of $352,000, and traceable fixed expenses of $104,000. During the same month, the West business segment had sales revenues of $140,000, variable expenses of $56,000, and traceable fixed expenses of $24,000. The common fixed expenses totaled $162,000 and were allocated as follows: $89,000 to the East business segment and $73,000 to the West business segment. Reference: 12-4
A properly constructed segmented income statement in a contribution format would show that the segment margin of the East business segment is: A) $352,000 B) $145,000 C) $234,000 D) $249,000 Feedback: AACSB: Analytic AICPA BB: Critical Thinking LO: 1 Level: Easy
14. The West Division of Cecchetti Corporation had average operating assets of $240,000 and net operating income of $42,200 in August. The minimum required rate of return for performance evaluation purposes is 19%. Reference: 12-18
What was the West Division's residual income in August? A) -$8,018 B) $3,400 C) -$3,400 D) $8,018 Feedback: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy
15. Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $580,000, variable expenses of $301,600, and traceable fixed expenses of $186,500. The Alpha Division has sales of $510,000, variable expenses of $178,500, and traceable fixed expenses of $222,100. The total amount of common fixed expenses not traceable to the individual divisions is $235,500. What is the company's net operating income? A) $374,400 B) $201,300 C) $609,900 D) ($34,200) Feedback: AACSB: Analytic AICPA BB: Critical Thinking LO: 1 Level: Easy
16. Ahartz Industries is a division of a major corporation. Data concerning the most recent year appears below: Reference: 12-16 The division's return on investment (ROI) is closest to: A) 18.2% B) 4.5% C) 22.3% D) 1.3% Feedback: ROI = Net operating income ÷ Average operating assets = $445,740 ÷ $2,000,000 = 22.3% AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
17. Beade Industries is a division of a major corporation. Last year the division had total sales of $16,760,000, net operating income of $770,960, and average operating assets of $4,000,000. Reference: 12-17
The division's turnover is closest to: A) 21.74 B) 4.19 C) 3.51 D) 0.19 Feedback: Turnover = Sales ÷ Average operating assets = $16,760,000 ÷ $4,000,000 = 4.19 AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy
18. Ferrar Corporation has two major business segments-Consumer and Commercial. Data for the segment and for the company for March appear below: In addition, common fixed expenses totaled $210,000 and were allocated as follows: $122,000 to the Consumer business segment and $88,000 to the Commercial business segment. Reference: 12-6
The contribution margin of the Commercial business segment is: A) $137,000 B) $184,000 C) $62,000 D) $423,000 Feedback: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy
19. Ferrar Corporation has two major business segments-Consumer and Commercial. Data for the segment and for the company for March appear below: In addition, common fixed expenses totaled $210,000 and were allocated as follows: $122,000 to the Consumer business segment and $88,000 to the Commercial business segment. Reference: 12-6
A properly constructed segmented income statement in a contribution format would show that the segment margin of the Consumer business segment is: A) $164,000 B) $62,000 C) $394,000 D) $184,000 Feedback: AACSB: Analytic AICPA BB: Critical Thinking LO: 1 Level: Easy
20. The Consumer Products Division of Goich Corporation had average operating assets of $800,000 and net operating income of $81,300 in May. The minimum required rate of return for performance evaluation purposes is 10%. Reference: 12-19
What was the Consumer Products Division's residual income in May? A) -$1,300 B) $8,130 C) $1,300 D) -$8,130 Feedback: AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy
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