The Following Selected Data Pertain to the Belt Division of Allen

question 140

Multiple Choice

The following selected data pertain to the belt division of Allen Corp. for last year:

$\begin{array} { | l | r | } \hline \text { Sales } & \$ 500,000 \\\hline \text { Average Operating Assets } & \$ 200,000 \\\hline \text { Operating Income } & \$ 80,000 \\\hline \text { Turnover } & 2.5 \\\hline \text { Minimum Required Return } & 20 \% \\\hline\end{array}$


-What was the return on investment?

• A) 15%.
• B) 16%.
• C) 20%.
• D) 40%.

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Definitions:

Fixed Costs

Overheads such as rent, salaries, and insurance that do not fluctuate with the level of goods produced or sold.

Variable Costs

Charges that vary in relation to the volume of output or services provided by a firm.

Fixed Costs

Expenses that do not change regardless of the level of production or business activity, such as rent, salaries, and insurance.

Selling Price

The amount of money for which an item is sold, potentially different from listing or cost price due to discounts or negotiations.