Wednesday, February 20, 2013

What are the respective residual incomes for the North and South Divisions

ACCOUNTING

Multiple Choice

The Bandage Medical Supply Company has two divisions that operate independently of one another. The financial data for the year 20x3 reported the following results:


North South

Sales $3,000,000 $2,500,000

Operating income 750,000 550,000

Taxable income 650,000 375,000

Investment 6,000,000 5,000,000


The company's desired rate of return is 10%. Income is defined as operating income.


What are the respective residual incomes for the North and South Divisions?

a. $30,000 and $50,000

b. $150,000 and $30,000

c. $150,000 and $50,000

d. $50,000 and a negative $150,000

Click here for the SOLUTION

No comments:

Post a Comment