The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations is
A) profit margin
B) residual income
C) return on investment
D) gross profit

Question

Quizplus · Accepted Answer

The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations is called residual income. This measure is used to evaluate the performance of a division in generating income above a required minimum return on investment. Profit margin is the ratio of net income to sales. Return on investment is the ratio of income generated by an investment to the cost of that investment. Gross profit is the difference between net sales and cost of goods sold.

The Excess of Divisional Income from Operations Over a Minimum