Residual income is the
A)contribution margin of an investment centre, less the required return on the average operating assets used by the centre.
B)contribution margin of an investment centre, plus the required return on the average operating assets used by the centre.
C)net operating income of an investment centre, less the required return on the average operating assets used by the centre.
D)net operating income of an investment centre, plus the required return on the average operating assets used by the centre.

Question

Quizplus · Accepted Answer

Residual income is calculated as the net operating income of an investment centre minus the required return on the average operating assets used by the centre. This measures the absolute amount of wealth created or destroyed by the centre during the period.

Residual Income Is the