If the invested capital is $150000 and target rate of return on investment is 16%, then the targeted annual operating income would be ___________?
Correct answer: C. $24,000
- A. $27,000
- B. $26,000
- C. $24,000
- D. $25,000
Explanation
Targeted operating income equals invested capital multiplied by the target ROI: $150,000 × 16% = $24,000. The ROI percentage must be applied to the investment base, not added to it.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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