If divisional income from operations is $100,000, invested assets are $850,000, and the minimum return on invested assets is 8%, the residual income is $68,000.

Question

Quizplus · Accepted Answer

To calculate residual income, we need to subtract the minimum return on invested assets from the divisional income from operations multiplied by invested assets. Therefore, residual income = ($100,000 - 0.08*$850,000) = $22,000, which is different from the given value of $68,000.

If Divisional Income from Operations Is $100,000, Invested Assets Are