Mr. Sy is the general manager of the XXX Division, and his performance is measured using the residual income method. Mr. Sy is reviewing the following forecasts to his division for the next year: Category Amounts Working Capital P 1,800,000 Revenue 30,000,000 Plant and Equipment 17,200,000 If the imputed interest charge is 15% and Mr. Sy wants to achieve a residual income of P2,000,000 what will costs (total expenses) have to be in order to achieve the targeted residual income?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
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Mr. Sy is the general manager of the XXX Division, and his performance is measured using the
residual income method. Mr. Sy is reviewing the following forecasts to his division for the next year:
Category Amounts
Working Capital P 1,800,000
Revenue 30,000,000
Plant and Equipment 17,200,000
If the imputed interest charge is 15% and Mr. Sy wants to achieve a residual income of
P2,000,000 what will costs (total expenses) have to be in order to achieve the targeted residual income?

 

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