All Other Things Equal, Which of the Following Would Increase

question 23

Multiple Choice

All other things equal, which of the following would increase the residual income of a division

• A)Decrease in average operating assets.
• B)Decrease in sales.
• C)Increase in minimum required return.
• D)Decrease in net operating income.

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Definitions:

Machine-Hours

A measure of production volume or activity based on the number of hours machines are operated within a specified period.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders, calculated before the period begins based on estimates.

Direct Labor-Hours

The entire duration of work performed by staff members directly participating in the manufacturing chain.

Machine-Hours

A measure of the total time machinery is in operation during a specified period, often used in allocating manufacturing overhead costs.