Question

Can you help me out with these True/False Statements

1. In general, leased items should not be included as investments when calculating ROI. T/F

2. The market price method sets the transfer price as the current price of the selling unit's product in the market. T/F

3. Asset turnover, the amount of dollar sales achieved per dollar on investment, measures the manager's ability to control expenses related to a given level of investment. T/F

4. Generally, liquidation value is higher than the replacement cost. T/F

5. The variable cost method sets the transfer price equal to the selling unit's variable cost plus the selling unit's allocated fixed costs. T/F

6. Return on sales (ROS) is a measure of profit per sales dollar; it measures the investment center manager's ability to control expenses and increase revenues to improve profitability. T/F

7. ROE is of special interest to shareholders and business owners because it is a direct measure of the firm's return to owners. T/F

8. Discounted cash flow (DCF) techniques are used to make capital investment decisions, while historical-cost-based ROI metrics are used to evaluate subsequent performance. T/F

Answer 1

Answer:

1.False

the leased assets should be included as investments since they represent assets used to generate income.Non inclusion would lead to overstatement of ROI.

2.True

3.False

The amount of sales dollar achieved per dollar of investment; measures the manager's ability to increase sales from a given level of investment.

4.False

Generally, replacement cost is higher than the liquidation value .

5.False

The variable cost method sets the transfer price is established by adding markup to total variable cost.

6.True

7.True

8.Trye