The Consumer Products Division of Goich Corporation had average operating assets of $800,000 and net operating income of $81,300 in May. The minimum required rate of return for performance evaluation purposes is 10%.What was the Consumer Products Division's residual income in May?
A) $(1,300)
B) $8,130
C) $1,300
D) $(8,130)

Question

Quizplus · Accepted Answer

Residual income is calculated as the net operating income minus the product of the average operating assets and the minimum required rate of return. Here, it's $81,300 - ($800,000 * 10%) = $81,300 - $80,000 = $1,300.

The Consumer Products Division of Goich Corporation Had Average Operating