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ELEN [110]
3 years ago
10

Mike Corporation uses residual income to evaluate the performance of its divisions. The company's minimum required rate of retur

n is 14%. In January, the Commercial Products Division had average operating assets of $970,000 and net operating income of $143,700. What was the Commercial Products Division's residual income in January?
Business
2 answers:
Tanya [424]3 years ago
8 0

Answer:

The answer is $7,900

Explanation:

Formula of Residual Income=Net Operating Income-(minimum required rate of return*average operating assets)

Residual income (RI)=$143,700-($970,000*14%)

RI=$7,900

Further we can alsocalculate

Return on investment (ROI)=$143,700/$970,000=14.81%

omeli [17]3 years ago
4 0

Answer: $7,900

Explanation:

Given the following ;

Minimum rate of return = 14%

Average operating asset = $970,000

Net operating income = $143,700

The residual income may be explained as the excess income a person has after deducting all expenses.

However, in the case of Mike Corporation, the residual income is the excess a corporation has after exceeding the minimum rate of return on it's investment.

Mathematically,

RESIDUAL INCOME(RI) =Net income - (minimum rate of return × average operating asset)

RI = $143,000 - (0.14 × $970,000)

RI = $143,700 - $135,800

RI = $7,900

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Three months ago, Central Supply stock was selling for $51.40 a share. At that time, you purchased five put options on the stock
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$4,350

Explanation:

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When a non-price factor changes--such as technology, expectations, prices of related goods, prices of inputs, or the number of s
ludmilkaskok [199]

Answer:

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  1. D) Supply and the entire curve shifts.
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Explanation:

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For example, new machinery that produces goods in a more efficient way, will shift the entire supply curve to the right. Suppliers will be able to produce more goods at the same costs.

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Several years ago, Grant County was sued by a former County employee for wrongful discharge. Although it was to be contested by
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Answer:

d) Debit Expenses $50,000 and Claims payable $100,000; Credit Cash $150,000.

Explanation:

As for the information provided,

There was this law suit against the company from past several years. Where the lawyers already estimated that liability on the company will arise amounting $100,000.

Thus, on the provisional basis such claims of $100,000 would have been provided ideally.

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Thus, entry to record such claim of $150,000 will be:

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Claims Payable A/c Dr.      $100,000

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