1. Maxwell Company established a center to provide its employee training seminars. Maxwell budgeted costs for a weekend training seminar for managers at $300 per employee. Actual costs were $315 per employee. The training center would be considered a (an)
a. asset center.
b. profit center.
c. cost center.
d. investment center.
2. Kennedy Aeronautics desires an 8% ROI on all investment projects. Details of a proposed investment include the following:
Sales Revenues $30,000
Expenses 27,000
Investment Turnover 1.5
Which of the following statements is accurate?
a. Based on ROI, the company should accept the investment project.
b. The investment project would have a 10% return.
c. The company should reject the investment project.
d. The company's margin is 14.3%.
3. The accounting records pertaining to a Cassidy Products investment project were recently destroyed by fire. The company accountant was able to recall the following information:
Desired ROI 12%
Net Income $260,000
Residual Income $20,000
Based on this information, how much is the company's investment in the project?
a. $225,000
b. $2,000,000
c. $1,460,000
d. $1,875,000
4. The management of Dakota Industries obtained the following information about the performance of a major investment project.
Revenues $200,000
Average Operating Assets 300,000
Net Operating Income 30,000
Desired ROI 10%
The project's residual income was
a. $30,000.
b. $10,000.
c. $0.
d. 10%.