1)This year Baldwin achieved an ROE of 28

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1)This year Baldwin achieved an ROE of 28.5%. Suppose management takes measures that decrease Asset turnover (Sales/Total Assets) next year. Assuming Sales, Profits, and financial leverage remain the same, what effect would you expect this action to have on Baldwin's ROE?

A. Baldwin ROE will decrease

B. Baldwin ROE will increase

C. Baldwin ROE will remain the same

2. On the income statement, which of the following would be classified as a variable cost?

A. R&D Expense

B. Depreciation Expense

C. Promotion Expense

D. Inventory Carry Expense