Are the materials costs and processing costs relevant in the choice between alte

Question

  Are the materials costs and processing costs relevant in the choice between   alternatives A and B? (Ignore the equipment rental and occupancy costs in   this question.) (Points : 2)

Both materials costs and processing costs are relevant
Neither materials costs nor processing costs are relevant
Only processing costs are relevant
Only materials costs are relevant

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?   (Points : 2)

$7,900
-$20,118
$20,118
-$7,900

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?   (Points : 2)

Explanation / Answer

1.

D. Only materials costs are relevant

2.

Residual income = Net operating income ? (Average operating assets

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