The Information Below Relates to Costs,revenues,and Assets Anticipated in the Shoe

question 105

Multiple Choice

The information below relates to costs,revenues,and assets anticipated in the Shoe Division of DKY Footwear Corporation:
$\begin{array}{ll}\text { Sales } & \$ 4,000,000 \\\text { Variable costs } & 75 \% \text { of sales } \\\text { Average assets employed } & \$ 12,000,000\\\text { Fiverl cocte: } &0\end{array}$

How would each of the following measures be affected if sales rise by $5,000 in the Shoe Division?
$\text {\underline{ROI } }$                $\text {\underline{Assert turnover } }$            $\text {\underline{ Profit margin} }$

• A)increase increase increase
• B)increase no change increase
• C)increase increase no change
• D)no change no change increase

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Definitions:

Contribution Margin

The amount by which sales revenue exceeds variable costs, used in breakeven analysis and to assess operational efficiency.

Profit Center Manager

An individual responsible for a division or unit within an organization, focusing on generating profit and controlling costs.

Performance Measure

Indicators used to evaluate and assess the effectiveness, efficiency, and success of an organization's activities or employee's performance.

Controllable Margin

A metric used in management accounting, representing the difference between sales revenue and controllable costs.