$$\text { Reference: } 12 - 10$$ Harstin Corporation Has Provided the Following Data

$$\text { Reference: } 12 - 10$$ Harstin Corporation has provided the following data: $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 625,000 \\\hline \text { Gross margin } & 70,000 \\\hline \text { Net operating income } & 50,000 \\\hline \text { Stockholders' equity } & 90,000 \\\hline \text { Average operating assets } & 250,000 \\\hline \text { Residual income } & 20,000 \\\hline\end{array}$$
-Some managers believe that residual income is superior to return on investment as a
means of measuring performance, since it encourages the manager to make investment decisions that are more consistent with the interests of the company as a whole.