The following information is available for Halle Department Stores: $\begin{array}{lr}
\text { Average operating assets } & \$ 600,000 \
\text { Controllable margin } & 60,000 \
\text { Contribution margin } & 150,000 \
\text { Minimum rate of return } & 8 \%
\end{array}$ How much is Halle's residual income?
A)$102,000
B)$540,000
C)$12,000
D)$48,000

Question

Quizplus · Accepted Answer

Residual income is calculated as the controllable margin minus the product of average operating assets and the minimum rate of return. Here, it is $60,000 - (8\% 	imes \$600,000) = \$60,000 - \$48,000 = \$12,000$.

The Following Information Is Available for Halle Department Stores How Much Is Halle's Residual Income? A)$102,000 B)$540,000 C)$12,000 D)$48,000

The Following Information Is Available for Halle Department Stores How Much Is Halle's Residual Income?
A)$102,000
B)$540,000
C)$12,000
D)$48,000