1. True or False: A properly designed balanced scorecard should allow managers to answer questions like: Which customer should be targeted and how can they be attracted and retained at a profit?

2. True or False : In computing residual income, expenses incurred in operating corporate headquarters should be allocated to the separate divisions on the basis of the contribution margins of the divisions.

3. If sales and average operating assets remain the same, a company's return on investment will:

Multiple Choice

• increase if net operating income increases.
• decrease if net operating income decreases.
• increase if margin decreases.
• decrease if margin increases.

4. The Sherlock Division recorded operating data as follows for the past year:

Sales	$300,000
Operating expenses	225,000
Average operating assets	225,000
Stockholders' equity	80,000
Minimum required rate of return	20%

For the past year, the margin was?

Multiple Choice

• 15.75%.
• 20.50%.
• 25.00%.
• 33.33%.

5. Which of the following is not an operating asset?

Multiple Choice

• cash.
• inventory.
• plant equipment.
• investment in another company.