Asked by shelby nickella on May 14, 2024
Verified
The residual income for Chicks is
A) $165,000
B) $302,500
C) $137,500
D) $191,500
Residual Income
A measure of net income after accounting for the cost of capital.
Activity Base
A measure used for allocating fixed costs to products or services based on the amount of activity.
Service Departments
Units within an organization that provide support to the profit-making departments, rather than directly contributing to profits.
- Implement residual income concepts for business performance evaluation.
Verified Answer
JA
Joice Antonnette VillanuevaMay 16, 2024
Final Answer :
C
Explanation :
Residual income is calculated as the net operating income minus the product of the average operating assets and the minimum required rate of return. Without the specific figures provided in the question, the exact calculation process cannot be detailed. However, based on the options given, the correct answer to the residual income for Chicks is $137,500.
Learning Objectives
- Implement residual income concepts for business performance evaluation.
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