assuming that income from operation amounts to 250,000 and top management has es

Question

assuming that income from operation amounts to 250,000 and top management has established 13% as the minimum rate of return on divisional assets totaling 1 million the residual income for the division is 250,000 130,000 120,000 80,000 assuming that income from operation amounts to 250,000 and top management has established 13% as the minimum rate of return on divisional assets totaling 1 million the residual income for the division is 250,000 130,000 120,000 80,000 assuming that income from operation amounts to 250,000 and top management has established 13% as the minimum rate of return on divisional assets totaling 1 million the residual income for the division is 250,000 130,000 120,000 80,000

Explanation / Answer

minimum rate of return on divisional assets=13%

minimum return on divisional assets=13%*$1,000,000=$130,000

Operating income=$250,000

Residual Income=$250,000-$130,000=$120,000

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