Reference: 12-03
the Axle Division of LaBate Company Makes and Sells

Multiple Choice

Reference: 12-03
The Axle Division of LaBate Company makes and sells only one product. Annual data on the Axle Division's single product follow: $$\begin{array} { | l | l | } \hline \text { Unit selling price } & \$ 50 \\\hline \text { Unit variable cost } & \$ 30 \\\hline \text { Total fixed costs } & \$ 200,000 \\\hline \text { Average operating assets } & \$ 750,000 \\\hline \text { Minimum required rate of return } & 12 \% \\\hline\end{array}$$
-If the Axle Division sells 15,000 units per year, the residual income should be

A) $100,000.
B) $50,000.
C) $10,000.
D) $30,000.