The Machining Division Has a Capacity of 2,000 Units

Multiple Choice

The Machining Division has a capacity of 2,000 units. Its sales and cost data are: Selling price per unit $100
Variable manufacturing costs per unit $25
Variable administrative costs per unit $5
Total fixed manufacturing overhead $20,000
Total fixed administrative costs $5,000
Residual income is:

A) The same as return on investment
B) A nonfinancial measure of performance
C) Net operating income minus a required rate of return X average operating assets
D) Sales divided by net operating income