If divisional income from operations is $75,000, invested assets are $737,500, and the minimum rate of return on invested assets is 6%, the residual income is $36,750.

Question

Quizplus · Accepted Answer

Residual income is calculated as divisional income minus the product of invested assets and the minimum rate of return. Here, it is $75,000 - ($737,500 * 0.06) = $75,000 - $44,250 = $30,750, not $36,750.

If Divisional Income from Operations Is $75,000, Invested Assets Are