Beta Division Had the Following Information What Is the Residual Income for Beta Division?
A)$(10,000)
B)$7,500

question 62

Multiple Choice

Beta Division had the following information: $\begin{array}{lr}\text { Asset base in Beta Division } & \$ 400,000 \\\text { Net income in Beta Division } & \$ 50,000 \\\text { Weighted average cost of capital } & 12 \% \\\text { Target ROI } & 15 \% \\\text { Margin for Beta Division } & 20 \%\end{array}$ What is the residual income for Beta Division?

• A)$(10,000)
• B)$7,500
• C)$48,000
• D)$60,000

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Definitions:

Total Profit

The total income of a business after subtracting all expenses from the total revenue obtained from sales and other sources.

Profit-Maximizing

Profit-maximizing is the process by which a firm determines the price and output level that returns the greatest profit.

Marginal Cost

The surplus cost involved in the production of an extra unit of a product or service.

Average Revenue

Average revenue is the amount of income generated per unit of goods or services sold, calculated by dividing the total revenue by the number of units sold.