Question 7 multiple choice a) ROI is used to evaluate A. profit centers. standard prices. investment centers. D. exceptional variances. Why is ROI better than income as a measure of performance for an investment center? A. The calculation for income is determined by GAAP, while ROI is adjusted to meet the needs of the company. B. ROI is simpler to calculate than income. C. ROI considers the amount invested as well as the net income. D. RO1 is forward looking, while income is backward looking. ROI can be improved by A. increasing the profit margin. B. generating more sales for each dollar invested. Both A and B are correct. D. Neither A nor Bis correct. d). Profit margin is A. the ratio of income to sales. B. multiplied by turnover to calculate ROI. the amount of income eamed on each dollar of sales. D. All of the above are correct. e) The January 2008 income statement for the television division of the Maddux Company is as follows: Sales $240,000 Operating expenses 100,000 Net operating income 140,000 Interest expense 20.000 Earnings before taxes 120,000 Tax expense (30%) _36.000 Net Income $84,000 If this division's invested capital is $400,000 then its return on investment is: 30%. B. 21%. 24.5%. D. 35%. Question 6 Multiple Choice ( show your calculations) 25 marks A. C