What is the division’s residual income?

What is the division’s residual income?

Iba Industries is a division of a major corporation. The following data are for the latest year of operations:

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . $5,820,000

Net operating income . . . . . . . . . . . . . . $436,500

Average operating assets . . . . . . . . . . . $2,000,000

The company’s minimum

Required rate of return . . . . . . . . . . . . . 18%

Required:

What is the division’s residual income?


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