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Responsibility Accounting Q

This document contains 11 practice questions about responsibility accounting. The questions cover calculating return on investment and asset turnover from financial statements. One question asks about accepting a project based on its effect on return on investment and residual income. Another asks to calculate residual incomes before and after a proposed investment. The remaining questions are unspecified.

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ibrahim sameer
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204 views

Responsibility Accounting Q

This document contains 11 practice questions about responsibility accounting. The questions cover calculating return on investment and asset turnover from financial statements. One question asks about accepting a project based on its effect on return on investment and residual income. Another asks to calculate residual incomes before and after a proposed investment. The remaining questions are unspecified.

Uploaded by

ibrahim sameer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Responsibility Accounting (Practice Questions)

Question 1

Question 2
The following information is available for company X.
Details 2010 2011
$ $
Profit 8,500 10,500
Sales 700,000 550,000
Capital employed 39,250 62,500

Required
a) Calculate the change in ROI from 2010 to 2011
b) Calculate asset turnover for 2011

Question 3
Division A of Aigburth Co is considering a project which will increase annual net
profit after tax by $35,000 but will require average inventory levels to increase by
$250,000. The current target rate of return on investment is 12% and the imputed
interest cost of capital is 11%.
Based on the ROI and / or RI is the project worthwhile to accept.
Question 4

Question 5

Question 6
A division with capital employed of $400,000 currently earns an ROI of 22%. It can make an
additional investment of $50,000 for a five-year life with nil residual value. The average net
profit from this investment would be $12,000 after depreciation. The division’s cost of capital
is 14%.

What are the residual incomes before and after the investment?
Question 7
Question 8

Question 9

Question 10
Question 11

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