Gamma Division
the Manager of Gamma Division Projects the Following $$\begin{array} { l l } \text { Sales } & \$ 100,000 \\\text { Operating income } & \$ 30,000 \\\text { Operating assets } & \$ 200,000\end{array}$$

question 6

Multiple Choice

Gamma Division
The manager of Gamma Division projects the following for next year: $$\begin{array} { l l } \text { Sales } & \$ 100,000 \\\text { Operating income } & \$ 30,000 \\\text { Operating assets } & \$ 200,000\end{array}$$ The manager can invest in an additional project that would require $30,000 investment in additional assets and would generate $4,200 of additional income. The company's minimum rate of return is 12%.
-Refer to Gamma Division. What is the residual income with the additional project?

• A) $4,200
• B) $6,000
• C) $6,600
• D) $27,600

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Definitions:

Job-order Costing

An accounting method that tracks costs individually for each job, suitable for bespoke or custom orders.

Predetermined Overhead Rate

A rate calculated before a period begins, based on the estimated overhead costs and activity levels, used to allocate overhead costs to products.

Direct Materials Cost

The cost of raw materials that are directly used in the production of goods, which is easily traceable to the finished product.

Direct Labor Wage Rate

The hourly wage rate paid to workers directly involved in the production of goods or services.