Alpha Division had the following information: Average operating asset base in Alpha Division $500,000 Operating income in Alpha Division $60,000 Cost of capital 14% Target return on investment (ROI) 16% Margin for Alpha Division 21% If the asset base is decreased by $120,000, with no other changes, what will Alpha Division's return on investment be? (Note: Round answer to two decimal places.) a. 18.50% b. 15.79% c. 10.50% d. 12.55%


Answer 1

Answer: Option B

Explanation: As we know that,

ROI=(Operating\ income)/(total\ assets)


Operating income = $60,000

total asset = current asset base - decrease in current asset base

total asset = $500,000 - $120,000

                  = $ 380,000

Now, putting the values into equation we get :-


               = 15.79%

Related Questions

Rory is the CFO of McIlroy Golf Designs Inc. MGDI earned $13 million last year and maintains a 30% dividend payout ratio. The company has 2 million shares of common stock outstanding and a P/E ratio of 10. What is the price per share of MGDI's stock
Which of the following best explains the purpose of a demand schedule?A. To calculate how much of a good consumers will use.B. To demonstrate how supply affects demand.smC. To indicate how supply and demand relate to price.D. To show the level of demand at various prices.SUBMIT
Dillard’s, Inc., operates department stores located primarily in the Southwest, Southeast, and Midwest. In its 2016 third-quarter report, the company reported Cost of Goods Sold of $880 million, ending inventory for the third quarter of $1,900 million, and ending inventory for the previous quarter of $1,500 million. Estimate merchandise purchases for the third quarter.
Pearl, Inc., has offered $422 million cash for all of the common stock in Jam Corporation. Based on recent market information, Jam is worth $391 million as an independent operation. If the merger makes economic sense for Pearl, what is the minimum estimated value of the synergistic benefits from the merger? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
1. Understanding opportunity costYou work as an assistant coach on the university swim team and earn $15 per hour. One day, you decide to skip the hour-long practice and go to the county fair instead, which has an admission fee of $9.The total cost (valued in dollars) of skipping practice and going to the fair (including the opportunity cost of time) is .(A) $6(B) $9 (C) $15 (D) $24

Seaside Company's manufacturing overhead is overallocated by $16,000. The following inventory account detail is provided Account Balance Allocated Manufacturing Overhead
(before proration) in Each Account Balance(before proration)
Work-in-process $25 750 S11,400
Finished goods 53 225 26,600
Cost of goods sold 75,650 38.000
Total $154,625 $76,000
Direct materials inventory has a balance of S15,000. If Seaside uses the proration approach (based on the amount of manufacturing overhead in ending balances), what will be the final balance in fatal work-in-process inventory?
a $9.000
b. 523 350
c. $23,085
d. 58 735



b. $23,350


The computation of final balance in fatal work-in-process inventory is presented with the help of spreadsheet as attached below:-

The formula is presented below:-

Amount of Over-allocated Overheads = Percentage of overhead applied × Over-allocated Overheads

Account Balance after = Account Balance before - Amount of Over-allocated Overheads

Therefore the correct answer is b. that is $23,350

Corporation W, which uses the accrual method of accounting, had earnings and profits of $95,000 on December 31, Year 1. Based on the following information, compute earnings and profits as of December 31, Year 2: Taxable income per return $185,000
Contributions in excess of 10% limitation 1,500
Interest paid for tax-exempt bonds 1,000
Tax-exempt interest received 3,000
Federal income taxes 55,400
MACRS depreciation in excess of straight-line alternative depreciation system 1,500

a. $226,600
b. 220,600
c. $282,000
d. $228,600



a. $226,600


Profit = $ (95000+185000-1500

- 1,000 + 3,000 - 55,400 + 1,500 )= $226000

items added back to profit are allowed deductions while items deducted are disallowed deductions

Depreciation was added back to profit because method used was in excess of straight line method and so does not reflect true depreciation

The overhead controllable variance is the difference between a. the actual overhead and the overhead applied to production.
b. actual overhead and budgeted overhead based on standard hours allowed.
c. budgeted overhead based on standard hours allowed and budgeted overhead based on actual hours worked.
d. budgeted overhead based on standard hours allowed and the overhead applied to production.


Answer: Between actual overhead and budgeted overhead based on standard hours allowed---- B

ExplanatioN:  The controllable variance is  defined as the difference between actual expenses or overhead incurred and the budget  overhead allowance based on standard hours allowed for work done. The variance is unfavorable controllable variance  If the actual  overhead is greater  than the budgeted overhead based on standard hours allowed for work done and is termed favorable controllable variance if the opposite occurs ie actual overhead being less than budgeted overhead based on standard hours allowed for work to be done.

Tina is very skilled at knowing what gifts are acceptable to give coworkers and clients when she travels around the world representing Pepsi.


Cultural competence  


A stock with a beta of 0.8 has an expected rate of return of 12%. If the market return this year turns out to be 5 percentage points below expectations, what is your best guess as to the rate of return on the stock?



The correct answer is:  The expected rate of return for the stock would be around 7%.


The Beta coefficient is a numeral measure that portraits the volatility of a stock compared to the overall market performance. If a stock's beta is closed to the numerical value one (1) it implies it is highly correlated to the price movement of the overall market.

In that case, if a stock's beta is 0.8 it implies it follows the market price movements. If the stock expected rate return is 12% but the market return turns out to be 5% points below expectations, it means the stock's return would end up being around 7%.

Final answer:

The rate of return on the stock would decrease proportionally to its beta value in response to the market return being lower than expected. Given the stock's beta of 0.8 and the market return falling 5 percentage points below expectations, the new estimated rate of return on the stock would be 8%.


The rate of return on a stock can be affected by changes in market conditions. If the market return this year is lower than expected, this could affect the return on the particular stock in question, which has a beta of 0.8. The beta value of a stock measures its sensitivity to market movements, with a value less than 1 indicating that the stock is less volatile than the market. Given the expected return of 12%, a market return 5 percentage points below expectations implies that the new expected return on the stock would decrease proportionally to its beta. This can be calculated as 12% - (0.8 * 5%) = 12% - 4% = 8%. Therefore, if the market return is 5 percentage points below expectations, your best guess for the rate of return on the stock would be 8%.

Learn more about Stock Return here:


Which function relates to maintaining inventory?OA. accounting
OB. production
human resource