Fallow Corporation Has Two Separate Profit Centers

question 12

Multiple Choice

Fallow Corporation has two separate profit centers. The following information is available for the most recent year: The West Division occupies 5,000 square feet in the plant. The East Division occupies 3,000 square feet. Rent, which was $40,000 for the year, is an indirect expense and is allocated based on square footage. Compute operating income for the West Division.

• A) $120,000.
• B) $95,000.
• C) $94,000.
• D) $69,000.
• E) $54,000.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, commonly used in finance to quantify the risk associated with a given investment.

Perfectly Negatively Correlated

A situation in which two variables move in opposite directions with a correlation coefficient of -1, implying that when one variable increases, the other decreases.

Risk-Free Portfolio

An investment group that is considered to have no risk of financial loss, typically represented by government bonds.

Expected Rate

The return that an investor anticipates or forecasts receiving on an investment over a set period.