The Dry Wall Division Reports the Following Operating Data for the Past

question 57

Multiple Choice

The Dry Wall Division reports the following operating data for the past two years:
$\begin{array}{lrr}&\text { Year } 1& \text { Year } 2\\\text { Margin } & 16 \% & ? \\\text { Turnover } & 2.5 & 2.0 \\\text { Average operating assets } & ? & \$ 150,000 \\\text { Net operating income } & \$ 40,000 & ? \\\text { Stockholders' equity } & \$ 80,000 & \$ 125,000\\\text { Sales }&?&?\end{array}$

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The return on investment at the Dry Wall Division was exactly the same in Year 1 and Year 2.
The margin in Year 2 was:

• A) 48%.
• B) 32%.
• C) 20%.
• D) 10%.

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Definitions:

Activity-Based Costing

An approach to costing that recognizes organizational activities and distributes each activity's costs to every product and service, reflecting their real consumption.

High-Low Method

A technique used in cost accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.

Variable Cost

A cost that varies directly with the level of production or sales volume, such as materials and labor costs.

Regression Study

An analysis technique used to determine the relationship between dependent and independent variables, often used for prediction and forecasting.