In January, the Universal Solutions Division of Zima Corporation had average operating assets of $520,000 and net operating income of $97,600. The company uses residual income, with a minimum required rate of return of 18%, to evaluate the performance of its divisions. What was the Universal Solutions Division's residual income in January?
A) $4,000
B) ($4,000)
C) $17,568
D) ($17,568)

Question

Quizplus · Accepted Answer

Residual income is calculated as net operating income minus the product of average operating assets and the minimum required rate of return. Here, it is $97,600 - ($520,000 * 0.18) = $97,600 - $93,600 = $4,000.

In January, the Universal Solutions Division of Zima Corporation Had