12-1. Which of the following costs is not deducted from sales to arrive at the divisional segment margin?

	a. Traceable fixed expenses.
	b. Common fixed expenses.
	c. Direct materials.
	d. Direct labour.

12-2. The performance of the manager of East Division is measured by residual income. Which of the following would increase the manager's performance measure?

	a. Increase in sales.
	b. Decrease in average operating assets.
	c. Increase in minimum required return.
	d. Decrease in net operating income.

12-3. Western, Inc. consists of two districts, East and West. The company as a whole had sales of $300,000, a contribution margin ratio of 20%, and a segment margin totaling $25,000. East District had sales of $80,000 during July, a contribution margin ratio of 35%, and a segment margin of $10,000. If the net income of Western for July is $11,000, the traceable fixed costs in West District must have been:

	a. $17,000
	b. $18,000
	c. $52,000
	d. $14,000

12-4. Kartoom, Inc. has two divisions, East and West. Assume the following data for the two divisions for 2000:

	East Division	West Division
Sales	$40,000	$85,000
Variable cost as a percentage of sales	60%	80%
Segment margin	$5,000	$12,500

If total net income for the Kartoom was $9,000 for 2000, then the total fixed costs (traceable and common) for the year were:

	a. $17,500.
	b. $8,500.
	c. $15,500.
	d. $24,000.

12-5. Segmented income statements are most meaningful to managers when they are prepared:

	a. on an absorption cost basis.
	b. on a cost behaviour (contribution) basis.
	c. on a cash basis.
	d. in a single-step format.

12-6. The Northern Division of the Kimball Company reported the following data for last year: Sales, $800,000; Shareholders' Equity, $250,000; Operating Expenses, $600,000; Average Operating Assets, $400,000; Interest Expense, $40,000; Minimum Required Rate of Return, 14%; Taxes Expense, $50,000; The return on investment last year for the Northern Division was:

	a. 50%
	b. 80%
	c. 27.5%
	d. 44%

12-7. The residual income for the Northern Division last year was:

	a. $112,000.
	b. $144,000.
	c. $110,000.
	d. $56,000.

12-8. Questions 8 -10 refer to the following: Sales, $750,000; Gross Margin, $65,000; Net Operating Income, $45,000; Shareholders' Equity. $75,000; Average Operating Assets, $250,000; Residual Income, $15,000. The margin for the past year was:

	a. 6.00%
	b. 8.67%
	c. 10.00%
	d. 8.00%

12-9. The return on investment for the past year was:

	a. 6%
	b. 30%
	c. 18%
	d. 26%

12-10. The turnover for the past year was:

	a. 1.4
	b. 3.3
	c. 10.0
	d. 3.0