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3 years ago

The following information pertains to the three divisions of Marlow Company:

Business

1 answer:

lubasha [3.4K]3 years ago

5 0

Answer:

The correct option is B

Residual income = ($9000)

Explanation:

<em>Residual Income is measure of how much a division or a part of a business is able to generate over and above the company-wide opportunity cost of capital.</em>

A division with a controllable over and margin over and above the cost of fund is evaluated to be profitable .

Residual income = Controllable margin - (cost of capital(%)× operating assets)

Cost of capital = Target ROI

Residual income for Division X

= 36,000 - (15%× 300,000 )

= ($9000)

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Given that,

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