Michaelson Company Recorded Operating Data for Its Auto Accessories Division

question 44

Multiple Choice

Michaelson Company recorded operating data for its auto accessories division for the year. How much is ROI for the year if management is able to identify a way to improve the contribution margin by $15,000, assuming fixed costs are held constant?

• A) 45.0%
• B) 22.5%
• C) 15.0%
• D) 12.0%

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Definitions:

Accounts Payable

Liabilities to creditors for goods or services purchased on credit, representing obligations that a company needs to pay off in the near term.

Interest Expense

The cost incurred by an entity for borrowed funds, recognized as an expense in the income statement over the period the funds are borrowed.

Unearned Revenue

Money received by a company for services or products which have not yet been delivered or performed.

Advance Subscription Sales

Revenue received from customers for subscriptions that are paid for before the subscription period begins.