Abbe Company Reported the Following Financial Numbers for One of Its

question 22

Multiple Choice

Abbe Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Assume a target income of 10% of average invested assets. Compute residual income for the division:

• A) $203,000.
• B) $193,000.
• C) $150,500.
• D) $60,300.
• E) $197,500.

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Definitions:

Consensus

General agreement among a group or community, often reached through collective deliberation.

External Factor

An influence originating outside an individual or system that significantly affects outcomes or decisions within it.

Kelley's Covariation Model

A theory in social psychology that explains how people attribute cause and effect based on the patterns of variability, consistency, and consensus.

Consistency

The state of being coherent and uniform in thoughts, beliefs, or actions over time.