Answer the Following Questions Using the Information Below

question 41

Multiple Choice

Answer the following questions using the information below:
The Bandage Medical Supply Company has two divisions that operate independently of one another. The financial data for the year 2012 reported the following results:
The company's desired rate of return is 10%. Income is defined as operating income.
-What are the respective residual incomes for the North and South Divisions?

• A)$60,000 and $100,000
• B)$300,000 and $60,000
• C)$300,000 and $100,000
• D)$100,000 and a negative $300,000

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Definitions:

Bankers' Acceptances

Short-term credit investments created by a non-financial firm and guaranteed by a bank.

Money Market Funds

Investment funds that invest in short-term debt securities with the aim of offering high liquidity with a low level of risk.

Institutional Funds

Investment pools that target large-scale investments, managed by professionals and accessible mainly to institutional investors.

Increased Disclosure

The practice of making more financial and operational information available to the public or regulatory bodies, aiming to improve transparency.