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Scotch Co. has the following results for the year: Sales P740,000 Variable expenses 260,000 Fixed expenses 300,000 Total divisional assets average P1,000,000.The companys minimum required

Scotch Co. has the following results for the year:

Sales P740,000

Variable expenses 260,000

Fixed expenses 300,000

Total divisional assets average P1,000,000.The companys minimum required rate of return is 14 percent.The residual income and return on investment for Scotch are:

A.

B.

C.

D.

Residual Income

P36,000

P40,000

P36,000

P40,000

Return on Investment

36%

18%

18%

36%

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