If divisional operating income is $100,000, invested assets are $850,000, and the minimum rate of return on invested assets is 8%, the residual income would be $32,000.

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Quizplus · Accepted Answer

Residual income is calculated as divisional operating income minus the minimum rate of return on invested assets multiplied by invested assets. In this case, residual income is $100,000 - (0.08 x $850,000) = $32,000.

If Divisional Operating Income Is $100,000, Invested Assets Are $850,000