1. Which of the following segment performance measures will decrease if there is an increase in the corporate interest expense?
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A
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Segment Return on Investment
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Segment Residual Income
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Yes
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Yes
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B
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Segment Return on Investment
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Segment Residual Income
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No
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Yes
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C
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Segment Return on Investment
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Segment Residual Income
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Yes
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No
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D
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Segment Return on Investment
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Segment Residual Income
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No
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No
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2. Assuming that sales and net income remain the same, a company's return on investment will:
A.increase if its operating assets increase.
B.decrease if its operating assets decrease.
C.decrease if its turnover decreases.
D.decrease if its turnover increases.
3.Some investment opportunities that should be accepted from the viewpoint of the entire company may be rejected by a manager who is evaluated on the basis of:
A.return on investment.
B.residual income.
C.contribution margin.
D.segment margin
4.The performance of the manager of Division A is measured by residual income. Which of the following would increase the manager's performance measure?
A.A decrease in the division's average operating assets.
B.A decrease in the division's net operating income.
C.An increase in the division's average operating assets.
D.An increase in the minimum required return.
5.The Parts Division sells Product A for $14.25 on the outside market. Lately the market for Product A has slowed down and there is idle capacity in the Parts Division. The costs to make Product A as recorded by the company's cost accounting system are:
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A. Direct materials
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$7.25
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B. Direct labor
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$2.25
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C. Variable manufacturing overhead
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$1.50
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D. Fixed manufacturing overhead
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$2.50
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6.The Assembly Division of the same company needs a part that is just like Product A. The Assembly Division can choose whether to buy Product A from an outside supplier for $14.15 or buy it internally from the Parts Division.
What is the most the Assembly Division would be willing to pay the Parts Division for Product A?
A.$13.50
B.$14.00
C.$14.15
D.$14.25