Use the information below to answer the following question(s):
Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows:

-What is the Photocopier Division's residual income?
A) $1,686,400
B) $353,600
C) $1,156,000
D) $1,690,000

Question

Use the information below to answer the following question(s):
Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows:
 
-What is the Photocopier Division's residual income?
A) $1,686,400 
B) $353,600 
C) $1,156,000 
D) $1,690,000

Quizplus · Accepted Answer

The Photocopier Division's residual income is $1,686,400. This is calculated by subtracting the division's required return from its operating income. The division's required return is 12%, or $1,690,000. The division's operating income is $3,376,400. Therefore, the division's residual income is $3,376,400 - $1,690,000 = $1,686,400.

Use the Information Below to Answer the Following Question(s)