Chapter 11 - C.C.

If a company earns income of $17,000 and has total assets (building, machinery, etc.) of $340,000, their ROI is 15%.

False

Margin is sales divided by assets, and turnover is operating income divided by sales.

False

Residual income must be positive or negative.

False

Return on investment (ROI) is calculated by dividing total investment by income.

False

The length of time it takes to produce a unit of output from the time raw materials are received (starting point) until the product is delivered to finished goods inventory (finishing point) is called responsiveness time.

False

If a company has sales of $80,000, operating income of $5,000, and assets of $20,000, it's ROI is 25%.

True

Residual income is the difference between operating income and the minimum dollar return required on a company's operating assets.

True

Transfer price is the price paid on sales between two divisions of the same company.

True

Transfer pricing policies are set by the overall company based on market price, full cost, or negotiation.

True

Velocity is the number of units of output that can be produced in a given period of time.

True