• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Performance measurement

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Performance measurement

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • October 22, 2015 at 2:45 pm #278414
    acca.dina
    Member
    • Topics: 2
    • Replies: 12
    • ☆

    Division A of Aigburth Co is considering a project which will increase annual net profit after tax by
    $30,000 but will require average inventory levels to increase by $200,000. The current target rate of
    return on investments is 13% and the imputed interest cost of capital is 12%.

    Based on the ROI and/or RI criteria would the project be accepted?

    A ROI – yes, RI – no
    B ROI – yes RI – yes
    C ROI – no, RI – yes
    D ROI – no, RI – no
    I am unable to solve this. please help me sir

    October 22, 2015 at 4:57 pm #278443
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    If average inventory levels (and therefore average net assets) increase by 200,000, the on ROI is will need to profit to increase by 13% x 200,000 = 26,000.
    The profit increases by 30,000 so on ROI it will be accepted.

    On RI, the RI will increase by 30,000 – (12% x 200,000) = 6,000.
    So since there is an increase in the RI it should be accepted.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • cBarsoum on The Stages of an Audit – Appointment – ACCA Audit and Assurance (AA)
  • John Moffat on Revaluation Reserve – ACCA Financial Accounting (FA) lectures
  • John Moffat on Revaluation Reserve – ACCA Financial Accounting (FA) lectures
  • CHICCO.J on ACCA AB Chapter 1 – The nature and structure of organisations – Questions
  • Joanne94 on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy