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Safari File Edit View History Bookmarks Window Help # A z ( S % Thu 2:37 PM Lynette Disla C E blackboard.pace.edu PACE UNIVERSITY Lynette Disla My Resource Page Courses Community ePortfolioBookstore Library Help e. $800 favorable QUESTION 5 10 points Save Answer Mike Corporation uses residual income to evaluate the performance of its divisions. The company's minimum required rate of return is 14%. In January, the Commercial Products Division had average operating assets of $970,000 and net operating income of $143,700. What was the Commercial Products Division's residual income in January? O a. a. -$7,900 b. $7,900 c. Correct answer not listed d. -$20,118 e. $20,118 QUESTION 6 10 points Save Answer Dodrill Company makes two products from a common input. Joint processing costs up to the split-off point total S43,200 a year. The company allocates these costs to the joint products on the basis of their total sales values at the split-off point. Each product may be sold at the split-off point or processed further. Data concerning these products appear below Product X Product Y Total a Disla DEC oc.docx 17 3D

Explanation / Answer

Answer b. $7900 Calculation of Mike Corporation Residual Income Present Operating Assets (A) $970,000 Minimum Required Rate of Return (B) 14% Minimum Net operating Income (C =A X B) $135,800 Actual Net Operating Income (D) $143,700 Minimum Net operating Income (C) $135,800 Residual Income (D-C) $7,900

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