The Hum Division of the Ho Company reported the following data for last year:

-The residual income for the Hum Division last year was:
A) $126,000
B) $46,000
C) $78,000
D) $22,000

Question

The Hum Division of the Ho Company reported the following data for last year:
 
-The residual income for the Hum Division last year was:
A) $126,000 
B) $46,000 
C) $78,000 
D) $22,000

Quizplus · Accepted Answer

Residual income = Net operating income - (Average operating assets × Minimum required rate of return)
= $150,000 - ($600,000 × 12%) = $78,000

The Hum Division of the Ho Company Reported the Following