Module 7: Return On Investment Final Exam
Please select the one BEST answer to each question.
Use the scenario below for Questions 1 through 4 only.
Daily Astrological Forecast Incorporated (DAFI) is a company that specializes in providing astrological readings for their clients who contact astrologers by telephone to get their astrological charts read, receive daily and monthly predictions, and acquire relationship consultation. There are 20 astrologers who answer the telephones from 5 p.m. to midnight, seven days a week. Each astrologer receives an average of 13 calls a day which transpire for an average of 30 minutes. DAFI charges clients $3.00 a minute for all astrological services. All astrologers, no matter what experience they have are paid $0.50 a minute.
DAFI decided to hire 50 more astrologers to work the telephones from midnight to 5 p.m. in order to have astrologers answering the telephones all day. The 50 astrologers were sent to a two day training without pay. The Telephone Experts company, which is located two blocks from DAFI, provided the training as well as a continental breakfast each day. The trainees had to buy their own lunches and they received no expense accounts from DAFI because technically the trainees were not on the clock until they began their first day on the job which was the day after training ended. The two day training cost DAFI $10,000. The purpose of the training was to teach the new employees how to keep customers on the telephone longer.
After training, the 50 new astrologers went to work. Each astrologer received an average of 10 calls a day which transpired for an average of 50 minutes.
1.Which listing below is most appropriate for DAFI's lists of costs and benefits for
their new employee training?
a.COSTS
1. The cost of training new employees.
BENEFITS
1. New employees spent more time on telephone and thus, generating
more revenue for the company than the experienced astrologers.
b.COSTS
1. The cost of training new employees.
2. The cost of air fare and hotel.
BENEFITS
1. New employees spent more time on telephone and thus, generating
more revenue for the company than the experienced astrologers.
c.COSTS
1. The cost of training new employees.
2. The cost of breakfasts.
BENEFITS
1. New employees spent more time on telephone and thus, generating
more revenue for the company than the experienced astrologers.
2. New employees make more money than the experienced astrologers.
d.COSTS
1. The cost of training new employees.
2. The cost of breakfasts and lunches.
3. The cost of cab rides.
BENEFITS
1. New employees spent more time on telephone and thus, generating
more revenue for the company than the experienced astrologers.
2. New employees make more money than the experienced astrologers.
2.True or False
Developing criteria can be as simple as saying, "For the above scenario, we will
only use criteria that produces significant costs or benefits. Thus, small dollar
amounts will be removed. Additionally, we will only use dollar figures that can
be substantiated by facts. If we have to make additional assumptions beyond the
information provided, then we will not use those costs or benefits."
3.True or False
When determining a dollar value for all data, it is useful to support the dollar
figures with evidence on how you obtained those figures.
4.In implementing the seven steps to calculate return on investment, Step 4 requires
you to determine if the data fits the criteria. For this question, let us use the
DAFI scenario and the list of costs and benefits illustrated below.
Moreover, let us use the following criteria:
- For the above scenario, we will only use criteria that produces significant costs or benefits. Thus, small dollar amounts (less than $500) will be removed.
- Additionally, we will only use dollar figures that canbe substantiated by facts. If we have to make additional assumptions beyond the information presented in the case study on page one, then we will not use those costs or benefits.
Based on the DAFI scenario and the list of costs and benefits illustrated above, what costs and benefits would you REMOVE because they don't fit the criteria.
a.I would remove cost 3.
b.I would remove cost 2.
c.I would remove cost 2 and 3.
d.I would not remove any costs or benefits.
5.Given the dollar values below, calculate the total costs.
COSTS
1.Training Costs$25,000.00
2.Hotel Costs$ 4,500.00
3.Airfare$ 6,200.00
4.Employees' Salaries Paid$15,500.00
5.Dinner Expenses$ 2,100.00
BENEFITS
1.Increases in sales$50,000.00
2.Decrease in staff$84,000.00
3.Decrease in equipment needed$ 4,500.00
a.$138,500
b.$53,300
c.$85,200
d.2.60
6.Given the dollar values below, calculate the total benefits.
COSTS
1.Training Costs$45,000.00
2.Hotel Costs$ 6,500.00
3.Airfare$ 6,200.00
4.Employees' Salaries Paid$17,500.00
5.Dinner Expenses$ 2,500.00
BENEFITS
1.Increases in sales$80,000.00
2.Decrease in staff$74,000.00
3.Decrease in equipment needed$ 6,500.00
- $160,500
- $82,800
- 77,700
d.2.07
7.Given the dollar values below, calculate the cost-benefit ratio.
COSTS
1.Training Costs$25,000.00
2.Hotel Costs$ 3,500.00
3.Airfare$ 6,200.00
4.Employees' Salaries Paid$47,500.00
5.Dinner Expenses$ 1,500.00
BENEFITS
1.Increases in sales$20,000.00
2.Decrease in staff$54,000.00
3.Decrease in equipment needed$17,500.00
a.$7,800
b.1.10
c.2.10
d.0.10
8.If you obtain a cost-benefit ratio of 12.9, then what does the cost-benefit ratio
indicate?
a.For every dollar the company spent on training, they received a $1.29 in
return which is based on gross benefits.
b.For every dollar the company spent on training, they received a $12.90 in
return which is based on net benefits.
c.For every dollar the company spent on training, they received a $12.90 in
return which is based on gross benefits.
d.For every dollar the company spent on training, they received a $1.29 in
return which is based on net benefits.
9.Given the dollar values below, calculate the return on investment.
COSTS
1.Training Costs$45,000.00
2.Hotel Costs$ 3,500.00
3.Airfare$ 9,200.00
4.Employees' Salaries Paid$49,500.00
5.Dinner Expenses$ 1,500.00
BENEFITS
1.Increases in sales$125,000.00
2.Decrease in staff$54,000.00
3.Decrease in equipment needed$17,500.00
a.2.81
b.1.81
c..81
d.1.0
10.If you obtain a cost-benefit ratio of .57, then what does the ratio indicate?
a.For every dollar the company spent on training, they received a $57.00in
return which is based on net benefits.
b.For every dollar the company spent on training, they received a $5.70 in
return which is based on net benefits.
c.For every dollar the company spent on training, they received a $5.70 in
return which is based on gross benefits.
d.For every dollar the company spent on training, they received a $0.57 in
return which is based on net benefits.
Module 7 TestCopyright © 2012 Third House Inc.1