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EM Company has a variable cost ratio of 60%. Sales revenue is $312,500, fixed costs are $100,000, and average operating assets are $200,000, Residual income

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EM Company has a variable cost ratio of 60%. Sales revenue is $312,500, fixed costs are $100,000, and average operating assets are $200,000, Residual income at EM Company is based on average operating assets. If EM Company's minimum required rate of return is 10%, then what is the company's residual income? O $5,000 $20,000 $15,000 O $67,500 O None of the above Full House Corporation has two divisions: Eastern Division and Western Division. The Eastern Division's operating data for the past two years are provided below: Year 1 Year 2 Return on investment 12% 36% Operating income ??? $360,000 Turnover ??? 3.0 ??? ??? Margin Sales revenue $3,200,000 ??? Eastern Division's margin in Year 2 was 150% of its margin in Year 1. What was Eastern Division's operating income in Year 1? O $240,000 $768,000 O $256,000 O $384.000 O None of the above The following income statement is available for Uptown Manufacturing for the most recently completed period: Sales revenue $531,250 Cost of goods $280.000 sold Gross margin $251.250 Selling and $195.900 administrative Operating $ 55,350 income Income tax (at $_22.140 40%) Net income $ 33,210 At the beginning of the period, the company's operating assets balance was $225,000. At the end of the period, the operating assets balance was $350,000. Uptown requires a minimum rate of return of 12% and uses average operating assets for performance measurement purposes. What is Uptown's residual income for the most recently completed period? $20,850 $12,850 $34,500 151 290) None of the above Acme Corporation has two business segments: Red Division and Blue Division. Operating data for the two segments are below. Red Blue $15,950,000 $28,760,000 Sales revenue $3,190,000 $7.190,000 Average operating assets Operating income Minimum required rate of return $633,700 $873,880 9.50% 11.00% Assume each segment is presented with an investment opportunity that will require an additional investment in assets of $400,000 and generate additional operating income of $40,000. If segment performance is evaluated based on residual income and managers choose actions that are in their segment's best interest, then which of the following statements is true? O Both segments are likely to accept Red is likely to accept but Blue will likely reject O Blue is likely to accept but Red will likely reject Both segments are likely to reject None of the above

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