The West Division of Frede Corporation Had Average Operating Assets

question 38

Multiple Choice

The West Division of Frede Corporation had average operating assets of $700,000 and net operating income of $120,800 in December. The minimum required rate of return for performance evaluation purposes is 16%. What was the West Division's residual income in December?

• A)$8,800
• B)($19,328)
• C)($8,800)
• D)$19,328

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Definitions:

Analyzing Actual Results

The process of examining the real outcomes or outputs of a business activity to assess performance and identify areas for improvement.

Control Phase

The stage in a process or project where monitoring occurs to ensure that objectives are being met and to implement corrective actions if necessary.

Overall Company Goals

Broad and general objectives that an organization seeks to achieve over a long-term period, guiding its mission and strategic direction.

Just-In-Time (JIT)

A production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand.