If divisional operating income is $75,000, invested assets are $637,500, and the minimum rate of return on the invested assets is 6%, the residual income calculated would be $36,750.

Question

Quizplus · Accepted Answer

Residual income = Divisional operating income - (Minimum rate of return x Invested assets)
Residual income = $75,000 - (0.06 x $637,500)
Residual income = $75,000 - $38,250
Residual income = $36,750

If Divisional Operating Income Is $75,000, Invested Assets Are $637,500