Which of the following is not an operating asset?

Multiple Choice

• Cash

• Inventory

• Plant equipment

• Common stock

Companies often decentralize their operations by

Multiple Choice

• geographic area.

• product line.

• customer base.

• All of the above.

Which of the following is not an advantage ofdecentralization?

Multiple Choice

• Top management is relieved of many short run decisions and canspend more time on long run decisions.

• Lower level managers receive more managerial experience earlierin their careers.

• Decisions are made by the most experienced managers in theorganization.

• Managers are often more satisfied with their jobs and areusually more motivated.

All other things the same, which of the following would increaseresidual income?

Multiple Choice

• Increase in average operating assets.

• Decrease in average operating assets.

• Increase in minimum required return.

• Increase in minimum required return.

Sebastian, an investment center manager in RKH Corporation, istrying to boost the current period’s return on investment. Which of the following actions will achieve that goal?

Multiple Choice

• Purchasing a new piece of equipment on the last day of thefiscal year.

• Raising commission rates for salespeople from 3% to 4%.

• Delaying preventive maintenance on existing equipment until nextyear.

• All of the above will increase the currentperiod’s ROI.

The Consumer Products Division of Goich Corporation had averageoperating assets of $550,000 and net operating income of $44,000 inMay. The minimum required rate of return for performance evaluationpurposes is 12%.

What was the Consumer Products Division's minimum requiredreturn in May?

Multiple Choice

• $5,280

• $44,000

• $71,280

• $66,000

Answer rating: 100% (QA)

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