The following information is available for Halle Department Stores: $\begin{array}{lr}
\text { Average operating assets } & \$ 600,000 \
\text { Controllable margin } & 60,000 \
\text { Contribution margin } & 150,000 \
\text { Minimum rate of return } & 8 \%
\end{array}$ How much is Halle's residual income?

Question

Quizplus · Accepted Answer

Residual income is calculated as Controllable Margin - (Average Operating Assets * Minimum Rate of Return). Here, it's $60,000 - ($600,000 * 8%) = $60,000 - $48,000 = $12,000.

The Following Information Is Available for Halle Department Stores How Much Is Halle's Residual Income? A) $102,000 B) $540,000

The Following Information Is Available for Halle Department Stores How Much Is Halle's Residual Income?
A) $102,000
B) $540,000