The Residual Income for each division:
Retail Division = $4,95,000
Commercial Division = $2,97,000
Internet Division = $4,86,000
<u> Retail Division</u> <u>Commercial Division</u> <u>Internet Division</u>
A. Operating Income $155,800 $134,000 $146,400
B. Minimum acceptable operating income as a % of invested assets:
<u> Retail Division</u> <u>Commercial Division</u> <u>Internet Division</u>
Invested assets $550,000 $330,000 $540,000
(Invested assets x 10%) = <u>$55,000 $33,000 $54,000</u>
C = A - B Residual Income =<u>$4,95,000 $2,97,000 $4,86,000 </u>
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<h3>What is Residual Income?</h3>
Residual Income refers to a calculation that provides the amount of money leftover that a company or individual has after all expenses have been paid. The amount of money that is left over after all expenses are covered is typically referred to as residual income, profit, net income, or earnings.
One specific type of meaning for residual income is similar to the terms passive income or residual pay—in that it can represent income earned on a continual basis, not tied to specific amounts of time, and not requiring active work to generate.
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