# ACC 111 Given the following data: Average operating assets Total liabilities Sales

1. Given the following data:Average operating assetsTotal liabilitiesSalesContribution marginNet operating income$504,000$23,520$168,000$85,680$45,360Return on investment (ROI) would be:A. 27.0%B. 9.0%C. 51.0%D. 17.0%2. Given the following data:Return on investment35%Turnover2.9Margin11%Sales$140,000Average operating assets$44,000Minimum required rate of return18%The residual income would be:A. $7,480B. $0C. $10,560D. $9,8003. Cabal Products is a division of a major corporation. Last year the division had total sales of$21,720,000, net operating income of $1,346,640, and average operating assets of $4,778,400.The company’s minimum required rate of return is 15%.The division’s margin is closest to: (Round your answer to 1 decimal place.)A. 6.2%B. 28.2%C. 41.3%D. 22.0%4. The West Division of Frede Corporation had average operating assets of $676,000 and netoperating income of $145,000 in December. The minimum required rate of return forperformance evaluation purposes is 23%A. $145,000B. $155,480C. $33,350D. $188,8305. Last year the Uptown Division of Gorcen Enterprises had sales of $300,000 and a netoperating income of $24,000. The average operating assets at Uptown last year amounted to$120,000.Last year at Uptown the return on investment was:A. 8%B. 12%C. 20%D. 40%6. The West Division of Frede Corporation had average operating assets of $700,000 and netoperating income of $120,800 in December. The minimum required rate of return forperformance evaluation purposes is 16%.What was the West Division’s minimum required return in December?A. $112,000B. $120,800C. $131,328D. $19,3287. The West Division of Frede Corporation had average operating assets of $700,000 and netoperating income of $120,800 in December. The minimum required rate of return forperformance evaluation purposes is 16%.A. $8,800B. ($19,328)C. ($8,800)D. $19,3288. Lusk Corporation produces and sells 14,600 units of Product X each month. The selling priceof Product X is $28 per unit, and variable expenses are $22 per unit. A study has been madeconcerning whether Product X should be discontinued. The study shows that $74,000 of the$101,000 in fixed expenses charged to Product X would not be avoidable even if the product wasdiscontinued. If Product X is discontinued, the company’s overall net operating income would:A. Decrease by $60,600 per monthB. Increase by $13,400 per monthC. Increase by $40,400 per monthD. Decrease by $40,400 per month9. Barrus Corporation makes 43,000 motors to be used in the productions of its power lawnmowers. The average cost per motor at this level of activity is as follows:Direct materials$10.20Direct labor$9.20Variable manufacturing overhead$3.80Fixed manufacturing overhead$4.75This motor has recently become available from an outside supplier for $26.05 per motor. IfBarrus decides not to make the motors, none of the fixed manufacturing overhead would beavoidable and there would be no other use for the facilities. If Barrus decides to continue makingthe motor, how much higher or lower will the company’s net operating income be than if themotors are purchased from the outside supplier? Assume that direct labor is a variable cost in thiscompany.A. $81,700 LowerB. $285,950 higherC. $122,550 higherD. $204,250 higher10. Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnetthas the capacity to manufacture and sell 14,000 cases of sauce each year but is currently onlymanufacturing and selling 12,600. The following costs relate to annual operations at 12,600cases:Total CostVariable manufacturing cost$151,200Fixed manufacturing cost$53,000Variable selling and administrative cost$50,400Fixed selling and administrative cost$35,000Gwinnett normally sells its sauce for $30 per case. A local school district is interested inpurchasing Gwinnett’s excess capacity of 1,400 cases of sauce but only if they can get the saucefor $15 per case. This special order would not affect regular sales or total fixed costs or variablecosts per unit. If this special order is accepted, Gwinnett’s profits for the year will:A. Increase by $840B. Decrease by $1,400C. Decrease by $12,600D. Decrease by $7,00011. Nesmith Corporation is considering two alternatives: A and B. Costs associated with thealternatives are listed below:Alternative A Alternative BMaterials costs$43,000$57,000Processing costs$49,000$49,000Equipment rental$11,600$28,800Occupancy costs$19,800$30,600What is the differential cost of Alternative B over Alternative A, including all of the relevantcosts?A. $42,000B. $165,400C. $123,400D. $149,80012. Tawstir Corporation has 500 obsolete personal computers that are carried in inventory at atotal cost of $720,000. If these computers are upgraded at a total cost of $140,000, they can besold for a total of $200,000. As an alternative, the computers can be sold in their presentcondition for $50,000.What is the net advantage or disadvantage to the company from upgrading the computers ratherthan selling them in their present condition?A. $60,000 advantageB. $150,000 advantageC. $10,000 advantageD. $700,000 disadvantage13. The management of Kabanuck Corporation is considering dropping product V41B. Datafrom the company’s accounting system appear below:Sales$929,000Variable expenses$408,000Fixed manufacturing expenses$343,000Fixed selling and administrative expenses$250,000All fixed expenses of the company are fully allocated to products in the company’s accountingsystem. Further investigation has revealed that $210,000 of the fixed manufacturing expensesand $121,000 of the fixed selling and administrative expenses are avoidable if product V41B isdiscontinued.According to the company’s accounting system, what is the net operating income earned byproduct V41B? Include all costs in this calculation—whether relevant or not.A. $72,000B. $(521,000)C. $(72,000)D. $521,00014. Eley Corporation produces a single product. The cost of producing and selling a single unitof this product at the company’s normal activity level of 48,000 units per month is as follows:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overheadVariable selling & administrative expenseFixed selling & administrative expense$46.60$8.90$1.90$18.90$3.40$16The normal selling price of the product is $102.10 per unit.An order has been received from an overseas customer for 2,800 units to be delivered this monthat a special discounted price. This order would have no effect on the company’s normal sales andwould not change the total amount of the company’s fixed costs. The variable selling andadministrative expense would be $2.00 less per unit on this order than on normal sales.Direct labor is a variable cost in this company.Suppose there is ample idle capacity to produce the units required by the overseas customer andthe special discounted price on the special order is $84.40 per unit. By how much would thisspecial order increase (decrease) the company’s net operating income for the month?A. $(47,000)B. $18,760C. $71,680D. $(31,640)