QUESTION 14 1. Selected data from Division A of Green Company are as follows: Sales $ 500,000 Average investment $ 300,000 Operating income $ 60,000 Minimum rate of return 15% 2. Division A's residual income (RI) is: a. $24,000. b. $15,000. c. $30,000. d. $54,000. e. $36,000. 5 points QUESTION 15 1. Red Company allocates research and development costs to its three research facilities based on each facility's total annual revenue from new product developments: Facility location Kentucky Arizona Illinois Total New product revenue $ 56,000,000 $ 100,000,000 $ 84,000,000 $ 240,000,000 Research & Development $ 60,000,000 2. Using revenue as an allocation base, the amount of costs allocated to the Illinois research facility is calculated to be: a. $17,000,000. b. $28,000,000. c. $33,000,000. d. $14,000,000. e. $21,000,000. QUESTION 18 1. What is an advantage of residual income? a. A firm can use it to forecast operating profit. b. It only requires one rate of return across all business units. c. A firm can use it to build up its supply of cash for future investments. d. A firm can adjust the required rates of return for differences in risk. e. It ties business units together to show company health. QUESTION 20 1. What special problems and opportunities arise in setting transfer prices in an international setting (i.e., for transfers between subunits that operate in different countries)? Hint: In terms of special problems, make sure you reference OECD requirements and practical implementation alternatives for general OECD requirements.)