Suppose a Company Evaluates Divisional Performance Using Both ROI and Residual

question 102

True/False

Suppose a company evaluates divisional performance using both ROI and residual income. The company's minimum required rate of return for the purposes of residual income calculations is 12%. If a division has a residual income of $6,000, then its ROI is greater than 12%.

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Definitions:

Weber's Law

A principle stating that the smallest noticeable difference in stimulus intensity is a constant proportion of the intensity of the initial stimulus.

Sensory Adaptation

The mechanism in which sense receptors reduce their responsiveness to steady stimuli over a period, helping organisms to pay attention to alterations in their surroundings.

Cochlear Implant

A surgically implanted electronic device that provides a sense of sound to a person who is profoundly deaf or severely hard of hearing.

Hearing Impairment

A partial or total inability to hear sound in one or both ears.