Selected Data from Division a of Green Company Are as Follows

question 24

Multiple Choice

Selected data from Division A of Green Company are as follows:
$\begin{array}{lcc}\text { Sales } & \$ & 500,000 \\\text { Average investment } & \$ & 300,000 \\\text { Operating income } & \$ & 60,000 \\\text { Minimum rate of return } & & 15 \%\end{array}$ Division A's residual income (RI) is:

• A)$15,000.
• B)$24,000.
• C)$30,000.
• D)$36,000.
• E)$54,000.

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Definitions:

Potential Benefit

The expected advantages or positive outcomes that may result from a specific action, investment, or decision.

Sunk Cost

A cost that has already been incurred and cannot be recovered, and thus should not impact future business decisions.

Gross Margin

The difference between sales revenue and the cost of goods sold, usually expressed as a percentage of sales revenue.

Net Operating Income

Income generated from regular business operations, excluding deductions for interest and taxes.