Division A of Ram Company has $1,000,000 of sales with a CM ratio of 35% and fixed expenses of $250,000. Ram Company’s average operating assets are $500,000. Which of the following will increase the division’s ROI? Multiple Choice a)There is an increase in the division’s sales by 10% while the CM ratio, fixed expenses, and operating assets remain unchanged. b)There is an increase in the division’s operating assets by 10% while sales, the CM ratio, and fixed expenses remain unchanged. c)There is an increase in the division’s fixed expenses by 10% while sales, the CM ratio, and operating assets remain unchanged. d)There is a decrease in the division’s CM ratio by 10% while sales, fixed expenses, and operating assets remain unchanged.
Division A of Ram Company has $1,000,000 of sales with a CM ratio of 35% and fixed expenses of $250,000. Ram Company’s average operating assets are $500,000. Which of the following will increase the division’s ROI? Multiple Choice a)There is an increase in the division’s sales by 10% while the CM ratio, fixed expenses, and operating assets remain unchanged. b)There is an increase in the division’s operating assets by 10% while sales, the CM ratio, and fixed expenses remain unchanged. c)There is an increase in the division’s fixed expenses by 10% while sales, the CM ratio, and operating assets remain unchanged. d)There is a decrease in the division’s CM ratio by 10% while sales, fixed expenses, and operating assets remain unchanged.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 1CE: Forchen, Inc., provided the following information for two of its divisions for last year: Required:...
Related questions
Question
Division A of Ram Company has $1,000,000 of sales with a CM ratio of 35% and fixed expenses of $250,000. Ram Company’s average operating assets are $500,000. Which of the following will increase the division’s ROI?
Multiple Choice
a)There is an increase in the division’s sales by 10% while the CM ratio, fixed expenses, and operating assets remain unchanged.
b)There is an increase in the division’s operating assets by 10% while sales, the CM ratio, and fixed expenses remain unchanged.
c)There is an increase in the division’s fixed expenses by 10% while sales, the CM ratio, and operating assets remain unchanged.
d)There is a decrease in the division’s CM ratio by 10% while sales, fixed expenses, and operating assets remain unchanged.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning