If divisional income from operations is $75,000,invested assets are $637,500,and the minimum rate of return on the invested assets is 6%,the residual income calculated would be $36,750.

Question

Quizplus · Accepted Answer

The formula for calculating residual income is:
Divisional income from operations - (Invested assets x Minimum rate of return)
So in this case:
$75,000 - ($637,500 x 0.06) = $36,750

If Divisional Income from Operations Is $75,000,invested Assets Are $637,500,and