Joseph Company Reported the Following Information for the Current Year

question 75

Multiple Choice

Joseph Company reported the following information for the current year: $\begin{array}{|l|r|}\hline \text { Sales } & \$ 787,000 \\\hline \text { Average Operating Assets } & \$ 375,000 \\\hline \text { Desired ROI } & 12 \% \\\hline \text { Residual Income } & \$ 11,250 \\\hline\end{array}$ The company's operating income was:

• A) $94,440.
• B) $56,250.
• C) $45,000.
• D) $33,750.

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Definitions:

Least Squares Regression

A statistical method used to find the best-fitting line through a set of data points by minimizing the sum of the squares of the vertical distances of the points from the line.

Coefficient of Correlation

A mathematical gauge that assesses the strength of the bond between the relative movements of two variables.

Sum of Squares

A statistical measure that quantifies the variability or dispersion of a set of numbers by squaring their deviations from the mean.

Coefficient of Determination

A statistical measure represented by R^2, which shows the proportion of variance in the dependent variable that is predictable from the independent variables.