-What Is Company B's Residual Income?
A) $9,000

question 176

Multiple Choice

$\begin{array}{l}\text { The following information is available on Company B: }\\\begin{array} { | l | r | } \hline \text { Sales } & \$ 950,000 \\\hline \text { Operating Income } & \$ 56,000 \\\hline \text { Shareholders' Equity } & \$ 100,000 \\\hline \text { Average Operating Assets } & \$ 190,000 \\\hline \text { Minimum Required Rate of Return } & 20 \% \\\hline\end{array}\end{array}$
-What is Company B's residual income?

• A) $9,000.
• B) $18,000.
• C) $24,000.
• D) $45,000.

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Definitions:

Machine-Hours

An operational metric indicating the total hours a piece of machinery is utilized during a specified timeframe, frequently used for costing and efficiency calculations.

July Production

The volume or quantity of goods and services produced by a company during the month of July.

Variable Overhead Efficiency Variance

The difference between actual and expected (or budgeted) variable overhead costs based on the actual level of production or activity.

July

The seventh month of the year in the Gregorian calendar, commonly associated with the height of summer in the Northern Hemisphere.