Given the following data: The residual income would be:
A)$2,800
B)$0
C)$6,000
D)$8,000

Name: Given the following data: The residual income would be: A)$2,800 B)$0 C)$6,000 D)$8,000
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Question

Given the following data:  The residual income would be:
A)$2,800 
B)$0 
C)$6,000 
D)$8,000

Quizplus · Accepted Answer

Margin = Net operating income ÷ Sales
0.10 = Net operating income ÷ $100,000
Net operating income = 0.10 × $100,000 = $10,000
Residual income = Net operating income - (Average operating assets × Minimum required rate of return)
= $10,000 - ($40,000 × 0.18)= $10,000 - $7,200 = $2,800

Given the Following Data: the Residual Income Would Be