Kevin Thomas Is the General Manager of the Modular Homes

question 67

Multiple Choice

Kevin Thomas is the general manager of the Modular Homes Division, and his performance is measured using the residual income method. Thomas is reviewing the following forecasted information for his division for next year: (CMA adapted)
$$\begin{array} { l c } \text { Category } & \text { Amount (thousands) } \\\text { Working capital } & \$ 1,800 \\\text { Reverue } & 30,000 \\\text { Plant and equipment } & 17,200\end{array}$$
If the cost of capital is 15% and Thomas wants to achieve a residual income target of $2,000,000, what will costs have to be in order to achieve the target?

• A) $9,000,000.
• B) $10,800,000.
• C) $25,150,000.
• D) $25,690,000.

Distinguish between internal and external reports and their implications.

Recognize the components and significance of a business plan.

Understand the roles of direct and indirect approaches in business communication.

Identify and explain the process of problem factoring in business analysis.

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Definitions:

Shoulder

A joint that connects the upper arm to the torso, allowing for a wide range of movement.

Knee

The joint that connects the thigh with the lower leg, encompassing the intersection of the femur, tibia, and patella.

Adduction

The movement of a limb or body part toward the midline of the body.

Supraspinatus

A muscle located in the shoulder, responsible for horizontal arm abduction and stabilizing the shoulder joint.