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17 September, 02:30

Worldwide Logistics provides the following information: Operating income $ 1 comma 550 comma 000 Net sales $ 14 comma 000 comma 000 Average total assets $ 2 comma 000 comma 000 Management's target rate of return 30 % What is the company's residual income?

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  1. 17 September, 05:52
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    The company's residual income is $950,000.

    Explanation:

    Residual Income is calculated as Operating Income less Cost of Investment.

    Calculation of Residual Income:

    Operating income $1,550,000

    Less Cost of Investment ($2,000,000 * 30%) ($600,000)

    Residual Income $950,000

    Conclusion:

    The company's residual income is $950,000.
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