Managerial accounting, 5th by jiambalvo test bank ch12

A profit center is a subunit that has responsibility for controlling costs and revenues and generating a return on assets invested in the subunit.. Managers who are evaluated favorably w

Decentralization and Performance EvaluationSummary of Questions by Objectivses and Bloom’s Taxonomy

1 In decentralized organizations, upper level corporate managers provide substantial authority to

subunits because they have the most expertise

2 An advantage of decentralization is that subunit managers can respond more quickly to changing

circumstances

3 Lack of goal incongruence is a problem in decentralized organizations

4 In a decentralized organization, performance evaluations encourage managers to behave as if their

own personal goals are congruent with the goals of the company as a whole

5 Increased motivation of managers is an advantage of decentralization

6 Evaluating the performance of a subunit is the same as evaluating the performance of the subunit

manager

7 Responsibility accounting holds managers responsible for all direct and allocated costs charged to

their operational unit

8 Managers of cost centers are evaluated in order to decide if a division should be expanded,

contracted, or changed

9 A profit center is a subunit that has responsibility for controlling costs and revenues and

generating a return on assets invested in the subunit

10 Most service departments, such as machine maintenance and computer services, are considered

13 One of the primary tools for evaluating the performance of profit centers is residual income

14 A profit margin of 12 percent indicates that each dollar of assets invested generated 12 cents of

profit

15 Return on investment can be improved by increasing net income or increasing the assets invested

16 One disadvantage of evaluating performance using return on investment is that assets are

measured at their market value

17 If managers are evaluated using return on investment, they are often over aggressive of accepting

new investments because the investment will provide an increase in net income

18 One of the primary tools for evaluating the performance of investment centers is residual income

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19 Managers who are evaluated favorably when profit is used as the performance measure will most

likely be evaluated favorably when return on investment is used as the performance measure

20 Managers tend to over invest when profit is used to evaluate them

21 Managers tend to under invest when return on investment is used to evaluate them

22 When residual income is calculated, an amount is subtracted to cover the profit that the company

believes should be earned by the assets invested in the subunit

23 When performance evaluation is based on return on investment, managers will usually accept

projects that yield less than the required rate of return

24 Using NOPAT as ‘income’ in the residual income model is appropriate because managers do not

control the choice of using debt versus equity financing for the assets invested in their division

25 Economic value added is calculated as the return on investment adjusted for accounting

distortions

26 The four dimensions of performance that are considered in a balanced scorecard are financial,

customer, internal processes, and strategy

27 A balanced scorecard is used to evaluate investment centers

28 A strategy map is a diagram of relationships across the four dimensions of a balanced scorecard

*29 When an efficient market exists, the variable cost will generally be the best transfer price

*30 Transfer prices should represent the opportunity costs of the transferred item

Material from the appendix to the chapter is marked with an asterisk (*)

32 Which of the following determines the level of decentralization in a company?

A The diversity of the company’s products

B The number of levels of employees and management in the company

C The extent of decision-making authority given to the subunit managers

D The globalization of the company’s sales

33 Which of the following is not an advantage of decentralization of a company?

A Subunit managers have better information

B Subunit managers will act to benefit the organization as a whole

C Subunit managers can respond quicker to changing circumstances

D Subunit managers receive training helpful to future transition into top-level management

positions

34 Which of the following is an advantage of a decentralized organization?

A Allows for duplication of activities

B Enables managers to enhance goal incongruence

C Provides excellent training for potential top-level executives

D Allows only top-level managers to make all decisions

35 Which of the following is a disadvantage of a decentralized organization?

A Managers’ goals are congruent with the goals of the company as a whole

B Some activities may be duplicated and incur unnecessary costs

C Managers with the highest authority may take inappropriate decisions

D Managers may take more time to respond to changing circumstances

36 Goal congruence refers to the match between

A locations of manufacturing plants and customers

B goals based on profits and those based on return on investment

C number of units produced and number of units sold

D goals of the individual managers and those of the company as a whole

37 Companies evaluate performance of subunits and subunit managers in order to

A identify successful operations

B influence the behavior of managers

C determine areas that need improvement

D All of these answer choices are correct

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38 The evaluation of a subunit should be separated from the evaluation of the subunit’s manager

because

A a subunit always shows better performance

B an excellent manager may be doing the best job possible in a poor subunit

C poor performance by managers may cause subunits to perform poorly

D GAAP requires separate evaluations of managers and the respective subunits

39 For what does responsibility accounting hold managers responsible?

A All costs charged to a manager’s subunit

B All costs charged to a manager’s subunit plus a share of company-wide fixed costs

C Only the costs that a manager can control

D Only the costs that a manager have personally approved

40 If a company uses responsibility accounting, a shift supervisor in the Austin production plant

should be held responsible for

A all costs associated with the Austin plant

B direct costs incurred on the supervisor’s shift

C a share of all of the company’s costs

D direct material, direct labor, and all manufacturing overhead incurred on the supervisor’s

shift

41 A cost center

A is responsible for generating profit

B should be evaluated using return on investment to best motivate managers

C places its managers responsible for all costs under their control

D requires a set of performance measures that are more complex than those for an

investment center

42 A subunit that has responsibility for controlling costs, but does not have responsibility for

generating revenue is a(n)

A investment center

B cost center

C profit center

D value added center

43 Which of the following units of Walmart will most likely be a cost center?

A A Walmart store in Dallas, Texas

B The corporate payroll department

C The pharmacy department

D The optical department

44 Most service departments, such as machine maintenance and janitorial services, are examples of

A investment centers

B profit centers

C cost centers

D transfer centers

45 If responsibility centers are ranked in order of increasing responsibility, the ranking is

A investment centers, cost centers, profit centers

B cost centers, investment centers, profit centers

C cost centers, profit centers, investment centers

D investment centers, profit centers, cost centers

46 Which of the following is a characteristic of a profit center?

A The center’s manager has control over revenues and costs

B The subunit has responsibility for generating revenues, controlling costs, and generating a

return on assets

C The subunit can be evaluated using residual income

D The subunit can be evaluated by comparing it to other investment centers

47 A manager who has the ability to replace assets within his division, is in control of what type of

D a center that will be evaluated on profit margin

49 Which of the following is a responsibility that distinguishes an investment center manager from a

profit center manager?

A Setting prices for products

B Controlling costs

C Generating revenues while controlling costs

D Significantly influencing investment decisions

50 What does ROI measure?

A The amount of profit generated out of each sales dollar

B The amount of sales generated out of each dollar of assets invested

C The amount of profit generated out of each dollar of assets invested

D The amount of revenue generated out of each sales dollar

51 Return on investment is the ratio of

A investment center income to invested capital

B sales to net income

C profit center revenues to assets invested

D profit center revenues to profit center expenses

52 Return on investment is used to evaluate

A profit centers

B cost centers

C investment centers

D revenue centers

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53 Why is return on investment better than income as a measure of performance for an investment

center?

A The calculation for income is determined by GAAP, while return on investment is

adjusted to meet the needs of the company

B Return on investment is easier to calculate than income

C Return on investment considers the amount invested as well as the income

D Return on investment is forward looking, while income is backward looking

54 Which of the following can improve a company’s return on investment?

I Increase the profit margin

II Decrease total assetsIII Decrease the contribution margin

A. I, II, and III

B. I and III

C. II and III

D. I and II

55 Profit margin is

A the ratio of sales to income

B multiplied by investment turnover to calculate return on investment

C the amount of income earned on each dollar of assets invested

D All of these answer choices are correct

56 The income amount that is used in the calculation of return on investment is usually

A earnings before interest and taxes

B net income as defined by GAAP

C operating cash flows

D net operating profit after taxes

57 NOPAT is

A net income with costs removed that managers at the divisional level are unable to control

B net income plus noncash flow amounts

C net income less the cost of financing

D net income minus noninterest-bearing current liabilities

58 NOPAT does not hold the investment center manager responsible for

A interest expense

B interest expense and noninterest-bearing current liabilities

C noninterest-bearing current liabilities

D assets invested in the division

59 NOPAT is used for ‘income’ in the return on investment formula because

A investment center managers should not be evaluated based on long-term financing

decisions since they do not have responsibility for making those decisions

B NOPAT represents the return to stockholders, and divisions are free to issue stock

C NOPAT represents the return to debt capital, and division managers generally are free to

issue debt needed to acquire new investments

D All of these answer choices are correct

60 Which of the following consists of noninterest-bearing current liabilities?

A Accrued income taxes and income taxes payable

B Accounts receivable and accounts payable

C Accounts payable and dividends declared

D Wages payable and notes payable

61 It is difficult to compare investment centers using return on investment when there is a significant

difference in the _ between the investment centers

A age of the assets

B net operating profit after taxes

C amount of noninterest-bearing current liabilities

Income tax expense (40%) 120,000

Income tax expense (30%) 36,000

64 South Division of Renato Enterprises reported net income of $480,000 in March on sales of

$7,900,000 If this division has no interest expense, an income tax rate of 30 percent, and reported

a return on investment of 12 percent, how much is invested capital?

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65 West Division of PoolGuard has invested capital of $900,000 This division incurred $80,000 in

interest expense and $20,000 in income tax expense related to interest in July If this division reported a return on investment of 15 percent, how much is NOPAT?

69 The Jersey Division of Yankee Products has invested capital of $1,400,000 This division incurred

$80,000 in interest expense and $140,000 in income tax expense in 2014 If this division reported

a return on investment of 14 percent, how much is net operating profit after taxes?

71 Canal Tower is a division of Sounder Products For the most recent year, Canal Tower had net

income of $16,000,000 Included in income was interest expense of $1,200,000 The operation’s tax rate is 40 percent Total assets of Canal Tower are $225,000,000, current liabilities are

$40,000,000, of which $35,000,000 are noninterest-bearing How much is return on investment for Canal Tower?

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73 The manager of the Beach Division of Treat Time is evaluating the acquisition of a new mobile

ice cream server The budgeted operating income of the Beach Division is currently $2,940,000 with total assets of $28,600,000 and noninterest-bearing current liabilities of $600,000 The proposed investment would add $18,000 to operating income and would require an additional investment of $120,000 The targeted rate of return for the Beach Division is 9 percent Ignoring

taxes, how much is the return on investment of the Beach Division if the ice cream server is not

74 The manager of the Beach Division of Treat Time is evaluating the acquisition of a new mobile

ice cream server The budgeted operating income of the Beach Division is currently $2,940,000 with total assets of $28,600,000 and noninterest-bearing current liabilities of $600,000 The proposed investment would add $18,000 to operating income and would require an additional investment of $120,000 The targeted rate of return for the Beach Division is 9 percent Ignoring taxes, how much is the return on investment of the Beach Division if the ice cream server is purchased?

75 The manager of the West Division of Beach Clothing Company is evaluating the acquisition of a

new embroidery machine The budgeted operating income of the West Division was $4,000,000 with total assets of $22,000,000 and noninterest-bearing current liabilities of $1,000,000 The proposed investment would add $750,000 to operating income and would require an additional investment of $3,500,000 The targeted rate of return for the West Division is 14 percent and the cost of capital is 9 percent Ignoring taxes, how much is the residual income of the West division

if the embroidery machine is not purchased?

B $1,930,000

C $2,110,000

D $1,060,000

76 The manager of the West Division of Beach Clothing Company is evaluating the acquisition of a

new embroidery machine The budgeted operating income of the West Division was $4,000,000 with total assets of $22,000,000 and noninterest-bearing current liabilities of $1,000,000 The proposed investment would add $750,000 to operating income and would require an additional investment of $3,500,000 The targeted rate of return for the West Division is 14 percent and the cost of capital is 9 percent Ignoring taxes, how much is the residual income of the West division

if the embroidery machine is purchased?

A $2,545,000

B $1,320,000

C $2,860,000

D $4,456,000

77 If a manager is evaluated using the return on investment, the manager may be reluctant to invest

in new equipment because the additional investment

A may reduce profit by the cost of the investment

B will decrease the level of assets

C may decrease the return on investment

D may increase investment turnover

78 Which of the following statements is true?

I Managers have a tendency to overinvest when return on investment is used as a performance measure

II Managers have a tendency to underinvest when profit is used as a performance measure

B II only

C Both I and II

D Neither I nor II

79 A manager is evaluated based on return on investment The corporate minimum required return is

11 percent and the manager runs a division that has attained a 14 percent return on investment Which of the following statements is true?

A The manager will most likely not invest in a project that has a return on investment of 13

percent

B The manager will invest in all projects that increase operating income

C The manager will not consider projects that exceed 14 percent

D The manager may prefer to invest in projects that have a return on investment that is very

close 11 percent to stay in line with corporate expectations

80 An adjustment is made to net income when calculating residual income to remove

A noninterest-bearing current liabilities

B interest and the related tax effect

C financing costs that the manager is able to control

D accounting distortions

81 Evaluating segments based on the segment’s return on investment will

A encourage each segment’s manager to select only projects that are above the company’s

current return on investment

B encourage each segment’s manager to only select projects that are above the individual

segment’s current return on investment

C encourage each segment’s manager to select only projects below the company’s required

rate of return

D encourage managers to select only projects below the segment’s cost of capital

82 Economic value added is

A essentially the same as residual income except that adjustments are made to liabilities and

assets to eliminate “accounting distortions” caused by interest expense

B essentially the same as residual income except that adjustments are made to income and

assets to eliminate “accounting distortions” that arise from following generally accepted accounting principles

C the use of qualitative and quantitative measures to evaluate performance

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D essentially the same as residual income except that adjustments are made to income and

assets to eliminate “accounting distortions” caused by noninterest-bearing current liabilities

83 Economic value added is residual income adjusted for

A noninterest-bearing current liabilities

B interest and the related tax effect

C financing costs that the manager is unable to control

85 The Produce Division of Saveway Shop had invested capital of $520,000 last year with $20,000

of noninterest-bearing current liabilities If the minimum required rate of return is 9 percent, the cost of capital is 7 percent, and last year’s residual income was $52,000, how much was last year’s NOPAT?

86 The Global Division of Station Depot has invested capital of $920,000 If residual income is

$4,600 and net operating profit after taxes is $69,000, how much is the cost of capital?

87 Doral Division of Resorts International reported net operating profit after taxes totaling $120,000

in 2014 The cost of capital is 10.5 percent and the invested capital is $560,000 R&D incurred in

2014 was $100,000 The company’s policy is to amortize intangible assets over 4 years The income tax rate is 30 percent How much is the company’s economic value added for 2014?

88 Marine Division of Sando Company reported net operating profit after taxes of $27,000 in 2014

The cost of capital was 14 percent and the invested capital was $150,000 Current year R&D expense is $80,000 If R&D had been capitalized, amortization would have been $20,000 for

2014 The income tax rate is 30 percent How much is adjusted NOPAT to be used in calculating EVA for 2014?

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C ($15,000)

89 Global Division of Food National Distribution’s economic value added for 2014 was $1,600 The

company’s cost of capital for the year was 16 percent and the company’s adjusted net operating profit after taxes (NOPAT) was $3,500 How much is the amount of the Global Division’s invested capital after adjustment for accounting distortions when calculating EVA?

Noninterest-bearing current liabilities $80,000

91 The Produce Division of Nature Green has invested capital of $940,000 and noninterest-bearing

current liabilities totaling $20,000 If the minimum required return is 11 percent, cost of capital is

9 percent, and residual income is $12,000, how much is NOPAT?

How much is residual income for 2014?

B ($180,500)

D ($227,500)

93 The following income statements for the year ending December 31 and other information are

available for the Langston Division of Act Company:

For the Year Ending December 31

Noninterest-bearing current liabilities $15,000,000 $12,300,000

Interest expense is $0 and the tax rate is 30 percent Langston Division amortizes intangible costs

over 4 years By how much is invested capital adjusted as it relates to computing EVA for 2014?

A $17,900,000

B $11,700,000

C $6,020,000

D $8,600,000

94 The following income statements for the year ending December 31 and other information are

available for the Langston Division of Act Company:

For the Year Ending December 31

Noninterest-bearing current liabilities $15,000,000 $12,300,000

Interest expense is $0 and the tax rate is 30 percent Langston Division amortizes intangible costs

over 4 years By how much is NOPAT adjusted as it relates to computing EVA for 2014?

A $8,190,000

B $11,700,000

C $8,600,000

D $6,020,000

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95 Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper

Information related to the two subsidiaries follows

Yard Recycling Paper Recycling

96 Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper

Information related to the two subsidiaries follows

Yard Recycling Paper Recycling

Which subsidiary has added the most to shareholder value in the last year?

A Yard recycling, because it has a higher return on investment

B Paper recycling, because it has a higher residual income

C Both contributed equally in different ways

D More information is needed to determine the answer

97 Pegasus Recycling has a subsidiary that recycles yard waste and another that recycles paper

Information related to the two subsidiaries follows

Yard Recycling Paper Recycling

Based on the limited information, which subsidiary is the best candidate for expansion?

A Yard recycling, because it has a higher return on investment

B Paper recycling, because it has a higher residual income

C Both contributed equally in different ways

D More information is needed to determine the answer

98 Which dimension of a balanced scorecard is a measure of the increase in employee training?

A Learning and growth dimension

B Internal processes dimension

C The customer dimension

D The financial dimension

99 In which dimension of a balanced scorecard is the measure of the number of new patents

developed through research and development?

A Learning and growth dimension

B Internal processes dimension

C The customer dimension

D The financial dimension

100 Which of the following is not one of the set of dimensions considered in the balanced scorecard?

B Internal processes

C Competition

D Learning and growth

101 Which of the following performance measures is considered the most sophisticated and is felt to

give top management the most comprehensive method of evaluating subunits?

A Balanced scorecard

B Return on investment

C Economic value added

D Net income

102 In what manner does the balanced scorecard challenge managers?

I. To focus on the single most important measure to the company

II. To perform on a variety of dimensions simultaneouslyIII. To look forward as well as backward

A I and II

B II and III

C I and III

D I, II, and III

*103 A transfer price is the price that is used to value transfers of goods and services

A from one subunit of a company to another subunit in the company

B from a subunit of a company to another company in the same industry

C from a subunit of the company to a wholesaler or retailer

D back to one of the company’s suppliers

*104 Which one of the following is not an acceptable base for determining the transfer price?

A Market prices

B Variable costs

C Full cost plus profit

D Fixed cost

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*105 Which of the following transfer prices will likely be closest to the opportunity cost of the

product?

A Variable costs less costs avoided on an internal transfer

B Market price less costs avoided on an internal transfer

C Variable cost

D Full cost plus profit

*106 Sorenson Products has two divisions: a kitchen wares division that manufactures ceramic dishes

and a ceramic resin division that manufactures the resin used in creating ceramic products All ceramic used by the kitchen wares division is supplied by the ceramic resin division, which also supplies resin to outside companies What is the best transfer price for the resin, assuming that theresin division is operating at only 70 percent of capacity?

A An amount that equates to the variable costs plus the contribution margin of the resin

B An amount that equates to the market price of the resin

C An amount that equates to the incremental cost of the resin

D An amount that equates to the full cost of the resin

*107 When making a decision that involves a product transferred from another subunit of the company,

the manager of the selling division should choose the alternative that

A maximizes the profit of his subunit

B requires a negotiated transfer price

C minimizes the goods needed from another subunit of the company

D maximizes profit for the company as a whole

*108 Which of the following is an incentive for managers who must deal with different tax rates in

international markets?

A Choose high transfer prices when goods are transferred to profit centers in a country with

a low tax rate

B Choose high transfer prices when goods are transferred to profit centers in a country with

a high tax rate

C Choose low transfer prices when goods are transferred to profit centers in a country with

a high tax rate

D Avoid transferring goods to foreign countries to avoid tariffs

*109 Which of the following methods of setting a transfer price most closely reflects an arm’s-length,

independent transaction?

A Full-cost price

B Variable cost

C Market price

D Full-cost plus profit

*110 Which of the following is a disadvantage of using a negotiated transfer price instead of a

cost-based transfer price?

A It reflects underlying opportunity costs associated with producing goods

B It encourages managers to sell products for less than variable costs

C It will allow one division to generate a large contribution margin and the other to generate

no contribution margin

D The transfer price may reflect negotiating skills of subunit managers

*111 Merlin Component’s Hillside Division is currently operating at 100 percent capacity (capacity is

100,000 units) The normal selling price for its wrap film is $12 per case At current operating levels, fixed costs are $3 per case and variable costs are $7 per case Another division of Merlin Components would like to buy from the Hillside Division If this sale is made, $1.20 per case in variable selling and administrative costs can be saved Calculate the most acceptable transfer price per unit

The Cereal Division within the same company would like to buy the oat grain from the Grain Division It is now purchasing its oat grain from an outside supplier for $20 per bushel If the Grain Division sells to the Cereal Division, $3 in variable costs can be avoided The Grain Division is currently operating at capacity and selling all production outside the company If the Grain Division decides to sell to the Cereal Division, what is the minimum transfer price per bushel?

East Division within the same company would like to buy this part from the West Division The East Division is currently purchasing the part from an outside supplier for $40 per unit If the West Division sells to the East Division, $5 in variable costs can be avoided Suppose that the West Division has enough capacity to handle the demand from the East division with no change

in fixed costs From the West Division’s perspective, what is the minimum sales transfer price that West division should charge to the East Division?

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*114 The Component Division of Sharp Ware Products produces blades for knives with the following

characteristics:

Annual capacity– number of knives 60,000

The Hunting Division within the same company would like to buy its required supply of blades from the Component Division Currently, the Hunting Division purchases the blades it uses to manufacture hunting knives from an outside supplier for $5.80 each If the Component Division sells to the Hunting Division, it can save $0.70 per blade The Component Division is currently operating at capacity and selling all its production outside the company If the Component Division decides to sell to the Hunting Division, what is the transfer price?

115 Division 3 of Baritune Enterprises reported sales of $820,000, NOPAT totaling $61,500, interest

expense of $8,000, and invested capital totaling $512,500 Its income tax rate is 30 percent As it pertains to evaluating investment centers, how much is Division 3’s profit margin?

116 Hardin Division of WestCo has sales of $300,000 and NOPAT of $15,000 The company’s

invested capital is $240,000 and its non-interest-bearing current liabilities are $20,000 What is Hardin Division’s profit margin as it relates to investment center performance evaluation?

117 Division 3 of Baritune Enterprises reported sales of $820,000, NOPAT totaling $61,500, interest

expense of $8,000, and invested capital totaling $512,500 Its income tax rate is 30% As it pertains to evaluating investment centers, how much is Division 3’s investment turnover?

118 Hardin Division of WestCo has sales of $300,000 and NOPAT of $15,000 The company’s

invested capital is $240,000 and its noninterest-bearing current liabilities are $20,000 What is Hardin Division’s investment turnover as it relates to investment center performance evaluation?

119 The Media Division of Winslow Company has invested capital of $1,250,000, sales of $590,000,

net income of $44,250, and interest expense of $7,000 Winslow’s income tax rate is 40 percent What is the Media Division’s return on investment?

120 Last year, Processor Division of Mathews PC Company earned NOPAT of $200,000 on sales of

$2,600,000 The division had invested capital of $1,600,000 with $62,000 of noninterest-bearing current liabilities How much is the division’s return on investment?

121 Align Division is one of the divisions of DynaCore Align’s invested capital is $420,000 Last

year, Align generated NOPAT of $64,260 on sales of $756,000 Which one of the following correctly calculates Align Division’s return on investment using the two components of return on investment?

A $64,260 ÷ $756,000

B 11.76% × 0.56

C $4,260 ÷ $756,000

D 8.5% × 1.80

122 Bottling Division of Fizzies Drink Company bottles soft drink produced by other divisions of

Fizzies Drink Company The Bottling Division had sales last year of $1,200,000, and earned

$300,000 in income (NOPAT) Its invested capital was $1,000,000 How much are the Bottling Division’s profit margin, investment turnover, and return on investment?

A 30%, 0.75, and 20%

B 30%, 0.87, and 25%

C 25%, 1.20, and 30%

D 120%, 0.25, and 30%

123 The Pastry Division of Dream Bread has invested capital of $1,300,000 During the past year, the

Pastry Division reported sales of $1,200,000 and earned $400,000 of NOPAT How much return did the Pastry Division generate on each dollar of assets invested in the division?

124 The Pastry Division of Dream Bread has invested capital of $1,300,000 During the past year, the

Pastry Division reported sales of $1,200,000 and earned $400,000 of NOPAT How much profit did the Pastry Division generate on each revenue dollar earned by the division?

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125 The Pastry Division of Dream Bread has invested capital of $1,300,000 During the past year, the

Pastry Division reported sales of $5,590,000 and earned $400,000 of NOPAT By how many times did revenue exceed the Pastry Division’s investment?

A 4.30 times

B 23.30 times

C 3.25 times

D 13.98 times

126 Leon Division had interest expense of $94,400 Its income tax rate was 32% Leon Division

generated net income totaling $784,400 With $2,400,000 of assets invested in Leon Division, for how much profit is the Leon Division manager responsible?

127 Tomlinson Tech has a cost of capital of 8 percent, a required rate of return of 9.5%, and an

income tax rate of 30 percent The Consumer Division of Tomlinson Tech has assets totaling

$2,800,000 and current liabilities at $180,000 with $40,000 of this amount being interest-bearing Sales for the year totaled $1,900,000 and interest expense totaled $20,000 Net income was

$166,500 for the year How much is the Consumer Division’s invested capital?

A $2,560,000

B $2,660,000

C $2,940,000

D $2,620,000

128 Tomlinson Tech has a cost of capital of 8 percent, a required rate of return of 9.5 percent, and an

income tax rate of 30 percent The Consumer Division of Tomlinson Tech has assets totaling

$2,800,000 and current liabilities at $180,000 with $40,000 of this amount being interest-bearing Sales for the year totaled $1,900,000 and interest expense totaled $20,000 Net income was

$166,500 for the year How much is the Consumer Division’s NOPAT?

129 Tomlinson Tech has a cost of capital of 8 percent, a required rate of return of 9.5 percent, and an

income tax rate of 30 percent The Consumer Division of Tomlinson Tech has assets totaling

$2,800,000 and current liabilities at $180,000 with $40,000 of this amount being interest-bearing Sales for the year totaled $1,900,000 and interest expense totaled $20,000 Net income was

$166,500 for the year How much is the Consumer Division’s residual income/(loss)?