If divisional operating income 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

The residual income is calculated as the divisional operating income minus the product of the minimum required return rate and the invested assets. So, it would be $100,000 - ($850,000 * 8%) = $100,000 - $68,000 = $32,000.

If Divisional Operating Income Is $100,000, Invested Assets Are $850,000