The Avila Division of Maldonado Company had operating income last year of $112,200 and average operating assets of $760,000. Maldonado's minimum acceptable rate of return is 5%. Required: 1. Calculate the residual income for the Avila Division. Round your answer to the nearest dollar. Residual income $ 2. Was the ROI for the Avila Division greater than, less than, or equal to 5%?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Residual Income
The Avila Division of Maldonado Company had operating income last year of $112,200 and average operating assets of $760,000. Maldonado's minimum acceptable
Required:
1. Calculate the residual income for the Avila Division. Round your answer to the nearest dollar.
Residual income $
2. Was the ROI for the Avila Division greater than, less than, or equal to 5%?
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