Which of the Following Statements MOST Accurately Explains a Positive

question 47

Multiple Choice

Which of the following statements MOST accurately explains a positive residual income?

• A) A division has produced more operating income than the target set by upper management.
• B) A division has generated positive operating income.
• C) A division has been liquidated, and there is some residual amount of income earned after the liquidation.
• D) A division has recorded a profit on sales of plant equipment which was sold for higher than its residual value.

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Definitions:

AVC

Average Variable Cost, calculated by dividing total variable cost by the quantity of output produced.

AP

If this refers to 'Average Product', it measures the output produced per unit of an input, averaging the total production over units of input. If it's another concept, additional context is needed for an accurate definition.

Marginal Product

The additional output that results from using one more unit of a particular input while holding other inputs constant.

Variable Resource

A factor of production whose quantity can be changed easily by a firm in the short run to adjust output levels.