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Zolol [24]
3 years ago
10

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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ICE Princess25 [194]

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