Recreation Equipment Company Has Several Divisions That Are Investment Centers

question 54

True/False

Recreation Equipment Company has several divisions that are investment centers.Data for the Boat Division and the Trailer Division are shown here:
$$\begin{array} { | l | r | r | } \hline & \text { Boat Division } & \text { Trailer Division } \\\hline \text { Operating income } & \$ 70,000 & \$ 42,000 \\\hline \text { Total assets at Jan. 1 } & \$ 692,000 & \$ 233,000 \\\hline \text { Total assets at Dec. 31 } & \$ 700,000 & \$ 218,000 \\\hline\end{array}$$ With regard to the efficient use of assets,the Boat Division has a higher return on investment (ROI)because it has the highest operating income.

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Definitions:

Real Wages

Refers to wages that have been adjusted for inflation, indicating the actual buying power of the compensation.

Labor-Productivity

A measure of the amount of goods and services produced by one hour of labor.

Capital Resources

Assets such as machinery, buildings, and technology that are used in the production of goods and services.

High Price

A term referring to a price level that is significantly above average or expected, often indicating scarcity, high demand, or premium quality.