Hansen Company reported the following information for 2012: $\begin{array}{lr}
\text { Sales } & \$ 787,000 \
\text { Average Operating Assets } & \$ 375,000 \
\text { Desired ROI } & 9 \% \
\text { Residual Income } & \$ 11,250
\end{array}$ The company's operating income for 2012 was
A) $37,080.
B) $33,750.
C) $45,000.
D) $363,750.

Question

Quizplus · Accepted Answer

The operating income is calculated by adding the residual income to the desired return on investment (ROI) on average operating assets. Desired ROI = 9% of $375,000 = $33,750. Operating income = $33,750 + $11,250 = $45,000.

Hansen Company Reported the Following Information for 2012 The Company's Operating Income for 2012 Was A) $37,080

Hansen Company Reported the Following Information for 2012 The Company's Operating Income for 2012 Was
A) $37,080