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27 December, 22:03

Payne Company reported the following information for the current year: Sales $ 840,000 Average operating assets $ 340,000 Desired ROI 12 % Net income $ 54,000 The company's residual income was: Multiple Choice $40,800. $6,000. $13,200. $19,200.

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  1. 27 December, 23:10
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    Residual income will be $13200

    So option (c) will be correct answer

    Explanation:

    We have given Sales = $840000

    Average operating assets = $340000

    Desired ROI = 12%

    Net income = $54000

    We have to find the residual income

    Residual income is given by

    Residual income = Net income - (Average operating assets * desired ROI)

    = $54000 - ($340000 * 0.12) = $13200

    So option (c) will be correct answer
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