The following information is available for the South Division of XYZ Company and
ID: 2470477 • Letter: T
Question
The following information is available for the South Division of XYZ Company and the single product it manufactures: selling price per unit ........................... $20 variable costs per unit .......................... $14 units sold ....................................... 75,000 turnover ......................................... 1.20 residual income .................................. $150,000 margin ........................................... 20% Calculate what the South Division's residual income would have been if they had sold 91,000 units
Explanation / Answer
Answer Unit Sold 75000 91000 Selling Price per unit 20 20 Sale value 1500000 1820000 Variable cost @ $ 14 perunit 1050000 1274000 Contributuion 450000 546000 other Expenses 150000 182000 Net Income 300000 364000 Equity Charge 150000 150000 Residual income 150000 214000 Residual income on 91000 unit will be $ 214000
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