contestada

The Clydesdale Company has sales of $4,500,000. It also has invested assets of $2,000,000 and operating expenses of $3,600,000. The company has established a minimum rate of return of 7%. What is Clydesdale Company's residual income?
a.$900,000
b.$1,400,000
c.$760,000
d.$252,000

Respuesta :

Answer:

c.$760,000

Explanation:

The computation of the residual income is shown below:

= Operating income - minimum return

where,

Operating income equal to

= Sales - operating expenses

= $4,500,000 - $3,600,000

= $900,000

And, the minimum return equal to

= Invested asset amount × minimum rate of return

= $2,000,000 × 7%

= $140,000

Now put these values to the above formula  

So, the value would equal to

= $900,000 - $140,000

= $760,000