Acc 3300 Exam 3

when using the ROI formula

NI / Avg operating assets
operating income is dividied by investment center assets

What does it mean when a business unit has a negative residual income

the business unit’s operating income is lower than the product of its investment base and minimum required rate of return

What will cause residual income to increase

decrease in minimum required rate if return on the asset

residual income is preferred over roi as a performance evaluation measure because

residual income concentrates on maximizing the amount of income rather than a percentage return as with roi

in a simple linear regression equation where units produced is usedd to predict electricity costs what is independednt and dependent variable

units = indenpentdent

electricity costs = dependent

Describe the use of output from linear regression

coeffiicient of intercept is est of fixed component of dependent vari
coefficient on the independent vari is est of variable amount per unit of independent variable

TLDR:
inctercept = esti of fixed cost of dependent
independent vari = esti of variable cost of independent

A regression where advertising expenditures is used to predict sales. What is independent and dependent

advertising = independent

sales = dependent