Wednesday, February 20, 2013

What is the Alpha Division's return on sales

ACCOUNTING

Multiple Choice

The top management at Munchie Company, a manufacturer of computer games, is attempting to recover from a flood that destroyed some of their accounting records. The main computer system was also severely damaged. The following information was salvaged:


Alpha Division Beta Division Gamma Division

Sales $2,500,000 (a) $1,150,000

Net operating income $1,500,000 $650,000 $ 575,000

Operating assets (b) (c) $ 766,667

Return on investment 0.25 0.15 (d)

Return on sales (e) 0.10 0.5

Investment turnover (f) (g) 1.5


What is the Alpha Division's return on sales?

a. 0.25

b. 0.42

c. 0.60

d. 0.75

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