Consider the Following Data for Three Divisions of a Company

question 89

Multiple Choice

Consider the following data for three divisions of a company, X, Y, and Z:
$\begin{array}{lrrr}\text { Divisional: } & \text { X } & \text { Y } & \text { Z } \\\text { Sales } & \$ 1,800,000 & \$ 900,000 & \$ 4,800,000 \\\text { Operating Income } & 252,000 & 108,000 & 240,000 \\\text { Investment in assets } & 630,000 & 540,000 & 3,000,000\end{array}$ The asset turnover (AT) for Division Y is calculated to be (rounded) :

• A) 1.43.
• B) 1.60.
• C) 1.67.
• D) 2.86.
• E) 3.33.

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Definitions:

AVC Curve

The Average Variable Cost (AVC) curve represents how the per-unit variable cost of production changes as the quantity of output changes.

ATC Curve

The average total cost curve, which plots the per-unit total cost of producing goods at different levels of output.

Opportunity Cost

Represents the benefits that are missed or foregone when choosing one option over another.

Implicit Costs

Costs that represent the opportunity costs of using resources that the firm already owns, not involving direct monetary payment.