Question 1

**Section B — Multi-Task Scenario 3 (Performance Measurement)**

*Scenario: CareLink NGO Mobile Clinics*
CareLink operates a division of mobile telehealth clinics in remote regions. The head office evaluates divisional performance using Residual Income (RI).

**Financial Data for the Division:**
- Divisional Operating Profit: $450,000
- Total Assets: $3,200,000
- Current Liabilities: $400,000
- Imputed interest cost of capital: 12% per annum

**Task:**
Calculate the Residual Income (RI) for the division.

*(Enter your answer as a whole number)*

Accepted Answer

1. Calculate Capital Employed: Total Assets - Current Liabilities.
2. Calculate the Imputed Interest Charge: Capital Employed × Cost of Capital (12%).
3. Calculate Residual Income: Operating Profit - Imputed Interest Charge.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the imputed interest on Total Assets ($3,200,000) instead of Capital Employed, which would give an incorrect RI of $66,000.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 6

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