Sousa Corporation provides the following financial information: $$\begin{array} { | l | r | }
\hline \text { Minimum acceptable operating income } & \$ 556,600 \
\hline \text { Average total assets } & \$ 2,600,000 \
\hline \text { Operating income } & \$ 708,000 \
\hline \text { Return on investment } & 27 \% \
\hline \text { Net sales } & \$ 900,000 \
\hline
\end{array}$$ Calculate the residual income of Sousa Corporation.
A)$2,043,400
B)$343,400
C)$151,400
D)$412,274

Question

Sousa Corporation provides the following financial information: $$\begin{array} { | l | r | } 
\hline \text { Minimum acceptable operating income } & \$ 556,600 \
\hline \text { Average total assets } & \$ 2,600,000 \
\hline \text { Operating income } & \$ 708,000 \
\hline \text { Return on investment } & 27 \% \
\hline \text { Net sales } & \$ 900,000 \
\hline
\end{array}$$ Calculate the residual income of Sousa Corporation.
A)$2,043,400
B)$343,400
C)$151,400
D)$412,274

Quizplus · Accepted Answer

Residual income is calculated as Operating Income minus Minimum Acceptable Operating Income. Thus, $708,000 - $556,600 = $151,400.

Sousa Corporation Provides the Following Financial Information Calculate the Residual Income of Sousa Corporation