Ibale Industries is a division of a major corporation. The following data are for the latest year of operations: Sales$29,960,000 Net operating income$1,827,560 Average operating assets$7,000,000 The company's minimum required rate of return 10%Required: What is the division's residual income?
What will be an ideal response?
Residual income = Net operating income ? Minimum required rate of return × Average operating assets = $1,827,560 ? 10% × $7,000,000 = $1,127,560
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