Dartford Company reported the following financial data for one of its divisions for the year;average investment center total assets of $3,500,000;investment center income $610,000;a target income of 12% of average invested assets.The residual income for the division is:
A)$536,800.
B)$1,030,000.
C)$190,000.
D)$683,200.
E)$493,200.

Question

Quizplus · Accepted Answer

Residual income is calculated as the investment center income minus the target income. The target income is 12% of $3,500,000, which is $420,000. Therefore, the residual income is $610,000 - $420,000 = $190,000.

Dartford Company Reported the Following Financial Data for One of Its