Division A of a firm produces a single product, which is sold only to Division B. Division A has a total investment of $1,000,000, while Division B has a total investment of $2,000,000. Division A annually sells 100,000 units of its product to Division B for $5 per unit and earns $150,000 in operating income. Division B currently earns $250,000. If Division A raises its selling price to $6 per unit and nothing else changes:
A) Division A's ROI will increase to 20%
B) The firm's overall ROI will rise
C) The firm's overall ROI will fall
D) The firm's overall ROI will remain unchanged
Correct Answer:
Verified
Q5: In a profit centre, managers' primary goal
Q7: KNY Corporation reported operating income of $80,000
Q8: Return on investment can be decomposed into
Q9: Technical details about complex manufacturing processes are
Q10: Return on investment is typically calculated as
Q11: Residual income is calculated as:
A)Operating income -
Q12: If manufacturing departments are only responsible for
Q13: Residual income measures a company's profits given
Q17: Responsibility accounting is the process of using
Q23: Which of the following responsibility centres can
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents