Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 11 - Performance Measurement in Decentralized Organizations - The Foundational 15 - Required - Page 499: 14

Answer

No, she will not pursue this year's investment as the residual income is lower than last year.

Work Step by Step

last year residual income = $200 000 - (0.15 x $625 000) = $106 250 this year residual income = $30 000 - (0.15 x $120 000) = $12 000
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