Picard Company reported the following information for 2012: $\begin{array}{lr}
\text { Sales } & \$ 800,000 \
\text { Average Operating Assets } & \$ 300,000 \
\text { Desired ROI } & 8 \% \
\text { Operating Income } & \$ 50,000
\end{array}$ The company's residual income for 2012 was
A) $3,200.
B) $24,000.
C) $26,000.
D) $64,000.

Question

Quizplus · Accepted Answer

Residual income = Operating income - (Desired ROI x Average operating assets)= $50,000 - (8% x $300,000)= $50,000 - $24,000= $26,000

Picard Company Reported the Following Information for 2012 The Company's Residual Income for 2012 Was A) $3,200

Picard Company Reported the Following Information for 2012 The Company's Residual Income for 2012 Was
A) $3,200