The Following Results Pertain to an Investment Center How Much Is the Residual Income (RI) for This Investment

question 108

Multiple Choice

The following results pertain to an investment center.
$\begin{array}{lc}\text { Sales } & \$ 1,500,000 \\\text { Variable costs } & 800,000 \\\text { Traceable fixed costs } & 100,000 \\\text { Average investment } & 1,000,000 \\\text { Divisional cost of capital (discount rate) } & 10 \%\end{array}$
How much is the residual income (RI) for this investment center?

• A)$100,000.
• B)$500,000.
• C)$600,000.
• D)$700,000.
• E)$800,000.

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Definitions:

Summary Measures

Quantitative data that provide a statistical overview of a set of observations or measurements.

MIN(range)

Refers to the smallest value in a given range of data.

Smallest Value

The minimum value within a set of numbers or measurements.

SUM(range)

A mathematical function that adds together all numbers in a specified range.