Selected financial data for The Portland Porcelain Works Coffee Mug Division is as follows:

What is The Portland Porcelain Works Coffee Mug Division residual income?
A)$396,000
B)$71,875
C)$356,500
D)$342,125

Question

Selected financial data for The Portland Porcelain Works Coffee Mug Division is as follows:

What is The Portland Porcelain Works Coffee Mug Division residual income?
A)$396,000 
B)$71,875 
C)$356,500 
D)$342,125

Quizplus · Accepted Answer

D)
Residual income = Operating income - (Target rate of return × Total assets)
= 414,000 - (10% × 718,750)
= 414,000 - 71,875
= 342,125

Selected Financial Data for the Portland Porcelain Works Coffee Mug