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 Estes Company has assembled the following data for its divisions for the past year: \text { Estes Company has assembled the following data for its divisions for the past year: }

Question 117

Multiple Choice

 Estes Company has assembled the following data for its divisions for the past year: \text { Estes Company has assembled the following data for its divisions for the past year: }
 Division A  Division B  Average Operating Assets $500,000? Sales ?$520,000 Operating Income $100,000$20,300 Turnover 1.254 Margin ?3.9% Minimum Required Rate of Return 14%? Residual Income ?$6,000\begin{array}{l|r|r|}\hline & \text { Division A } & \text { Division B } \\\hline \text { Average Operating Assets } & \$ 500,000 & ? \\\hline \text { Sales } & ? & \$ 520,000 \\\hline \text { Operating Income } & \$ 100,000 & \$ 20,300 \\\hline \text { Turnover } & 1.25 & 4 \\\hline \text { Margin } & ? & 3.9 \% \\\hline \text { Minimum Required Rate of Return } & 14 \% & ? \\\hline \text { Residual Income } & ? & \$ 6,000 \\\hline\end{array}
-What was Division A's residual income?


A) $20,000.
B) $30,000.
C) $35,000.
D) $45,000.

Correct Answer:

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