Question

A division of cream, inc. had average operating assets of $2,600,000. the company requires a return on investment of at least 8%. the division earned controllable margin of $250,000 on sales of $3,200,000. how much is residual income

Answer 1

If a division of cream, inc. had average operating assets of $2,600,000 and the company requires a return on investment of at least 8%, then the division earned a controllable margin of $250,000 on sales of $3,200,000, so the residual income will be $42,000.