CinRich Corporation Recorded Operating Data for Its Waterhole Division for the Year.CinRich

question 68

Multiple Choice

CinRich Corporation recorded operating data for its Waterhole division for the year.CinRich requires a 9% rate of return. $$\begin{array} { l r } \text { Sales } & \$ 500,000 \\\text { Controllable margin } & 90,000 \\\text { Total average assets } & 300,000 \\\text { Fixed costs } & 30,000 \\\text { Residual income } & 50,000\end{array}$$ Suppose CinRich experiences an increase of $50,000 in controllable fixed costs.Will the new ROI be acceptable?

• A)Yes.The ROI will remain at 30% which exceeds the required ROI.
• B)Yes.The new ROI is still above the required ROI.
• C)No.The ROI drops to less than 9%.
• D)There is not enough information to determine the new ROI.

---

Definitions:

Fungible

A characteristic of goods, commodities, or assets that are equivalent and interchangeable, such as currency or certain commodities.

State Governments

The governing bodies of individual states in a federal system, responsible for local legislation, enforcement, and services within their territories.

Temporary Assistance

Short-term support or aid provided to individuals or organizations in need, often through government programs or non-profit organizations.

Needy Families

Households that require assistance due to financial hardship, poverty, or lack of basic resources for living.