Terra Company Has Two Divisions,the Retail Division and the Wholesale

question 33

Multiple Choice

Terra Company has two divisions,the Retail Division and the Wholesale Division.The following information was gathered for the two divisions for the current year: $\begin{array}{|l|lr|lr|}\hline & {\text { Retail Division }} & &{\text { Wholesale Division }} \\\hline \text { Operating income } & \$ & 2,500,000 & \$ & 6,000,000 \\\hline \text { Operating assets } & \$ & 16,000,000 & \$ & 36,000,000 \\\hline\end{array}$ Terra Company has set a target return on investment (ROI) of 15% for both divisions Which of the following statements is accurate?

• A) Residual income for the wholesale sales division was $100,000
• B) Residual income for the wholesale sales division was $600,000
• C) Residual income for the retail sales division was $600,000
• D) None of these.

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Definitions:

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