The Following Data Relates to the Miracle Corporation and Its

question 148

Multiple Choice

The following data relates to the Miracle Corporation and its Toy Division. $$\begin{array} { | l | r | } \hline \text { Toy Division sales } & \$ 8,000,000 \\\hline \text { Toy Division aperating income } & \$ 480,000 \\\hline \text { Toy Division total assets } & \$ 2,000,000 \\\hline \text { Toy Division current liabilities } & \$ \text { 600,000 } \\\hline \text { Corporate target rate of return } & 14 \% \\\hline \text { Corporate weighted average cost of capital } & 10 \% \\\hline \text { Corporate effective tax rate } & 30 \% \\\hline\end{array}$$
- What is the Toy Division's sales margin?

• A)6%
• B)24%
• C)30%
• D)400%

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Definitions:

Spending Variance

The difference between the budgeted amount of spending and the actual amount spent.

Actual Cost

The real, total expenses incurred for a project or production, including all direct and indirect costs.

Plane Operating Costs

The expenses associated with the operation of an aircraft, including fuel, maintenance, crew salaries, and depreciation.

Measures of Activity

Quantitative techniques or metrics used to assess the level of activity or operations within a business or process.