Carriage Incorporated Manufactures Horse Carriages

question 57

Multiple Choice

Carriage Incorporated manufactures horse carriages. The company has two divisions, Wheels and Assembly. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 2018:
ASSETSINCOME

The company is currently using a 12% required rate of return.
What are Wheels's and Assembly's residual incomes based on book values, respectively?

• A) $71,400; $81,800
• B) $81,800; $71,400
• C) $68,000; $51,000
• D) $51,000; $68,000

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Definitions:

Work in Process Inventory

Goods and materials that are in the process of being manufactured but are not yet finished products.

Custom-made Furniture

Furniture specifically designed and built to meet the unique requirements and preferences of an individual customer.

Training Films

Educational movies or videos designed to improve knowledge and skills in a specific area.

Finished Goods Inventory

Products that have completed the manufacturing process and are ready for sale, representing a component of a company's current assets.