If the required rate of return is 13%, operating income is $375000 and the total investment is $2650000, then the residual income would be ____________?
Correct answer: B. $30,500
- A. $20,500
- B. $30,500
- C. $25,500
- D. $32,500Compare Investment Apps
Explanation
Residual income equals operating income minus the required return on investment: $375,000 − (13% × $2,650,000) = $30,500. The capital charge is therefore $344,500.
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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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