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

Question

Quizplus · Accepted Answer

Residual income is calculated as divisional income from operations minus (invested assets multiplied by minimum rate of return):

Residual income = $100,000 - ($850,000 x 0.08)
Residual income = $100,000 - $68,000
Residual income = $32,000

Therefore, the statement is true.

If Divisional Income from Operations Is $100,000,invested Assets Are $850,000,and