Dynamic Corporation provides the following financial information: $$\begin{array} { | l | r | }
\hline \text { Minimum acceptable operating income } & \$ 556,600 \
\hline \text { Average total assets } & \$ 2,600,000 \
\hline \text { Operating income } & \$ 712,000 \
\hline \text { Return on investment } & 27 \% \
\hline \text { Net sales } & \$ 900,000 \
\hline
\end{array}$$ Calculate the residual income of Dynamic Corporation.
A) $2,043,400
B) $343,400
C) $155,400
D) $4,255,569

Question

Dynamic Corporation provides the following financial information: $$\begin{array} { | l | r | } 
\hline \text { Minimum acceptable operating income } & \$ 556,600 \
\hline \text { Average total assets } & \$ 2,600,000 \
\hline \text { Operating income } & \$ 712,000 \
\hline \text { Return on investment } & 27 \% \
\hline \text { Net sales } & \$ 900,000 \
\hline
\end{array}$$ Calculate the residual income of Dynamic Corporation.
A) $2,043,400
B) $343,400
C) $155,400
D) $4,255,569

Quizplus · Accepted Answer

Residual income is calculated as Operating Income minus Minimum Acceptable Operating Income. Thus, $712,000 - $556,600 = $155,400.

Dynamic Corporation Provides the Following Financial Information Calculate the Residual Income of Dynamic Corporation