Question
Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year:
Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year:
| Retail Division | Wholesale Division | ||||||
| Operating income | $ | 2,540,000 | $ | 6,040,000 | |||
| Operating assets | $ | 16,400,000 | $ | 36,400,000 | |||
Terra Company has set a target return on investment (ROI) of 15% for both divisions. Which of the following statements is accurate?
Multiple Choice
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Residual income for the retail division was $580,000.
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Residual income for the wholesale division was $580,000.
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Residual income for the wholesale division was $80,000.
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None of these answers are correct.
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Financial Accounting Preparing Financial Statements AAT Level 3 Study Text And Exam Practice Kit
Authors: MarZar Ltd
1st Edition
979-8846976672
