Chick-Fil-A are the Lord’s Calories (CLC) has the following divisions within their company that achieved the reported ROIs for the previous year:   Division ROI A 15% B 20% C 18%   CLC has been approached with a $350,000 investment opportunity. Which division will AFA choose to invest in, and how much operating income will be generated from the investment?   A. AFA will invest in Division A; the investment will earn operating income of $52,000 B. AFA will invest in Division C; the investment will earn operating income of $63,000 C. AFA will invest in Division B; the investment will earn operating income of $70,000 D. AFA will invest in Division A; the investment will earn operating income of $63,000

Cornerstones of Cost Management (Cornerstones Series)
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Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 1CE: Forchen, Inc., provided the following information for two of its divisions for last year: Required:...
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Chick-Fil-A are the Lord’s Calories (CLC) has the following divisions within their company that achieved the reported ROIs for the previous year:

 

Division ROI

A 15%

B 20%

C 18%

 

CLC has been approached with a $350,000 investment opportunity. Which division will AFA choose to invest in, and how much operating income will be generated from the investment?

 

A. AFA will invest in Division A; the investment will earn operating income of $52,000

B. AFA will invest in Division C; the investment will earn operating income of $63,000

C. AFA will invest in Division B; the investment will earn operating income of $70,000

D. AFA will invest in Division A; the investment will earn operating income of $63,000

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