Question

Residual income is: A. income beyond the breakeven point determined by the product's lifecycle. B. a percentage of income received by an organization for its participation in a joint venture. C. excess income earned after budgeted income has been achieved. D. the excess of investment center income over the minimum return set by management.

Answer 1

The correct option is d) the excess of investment center income over the minimum return set by management

Step-by-step explanation:

Residual Income is the total amount of net income a firm generates which is in excess of the minimum required rate of return set by the firm and all the cost of capital which was used by the firm in generating the income has been paid off . Residual income is generally used to assess the performance of a business unit or department and even in the capital investment made by the firm.