Dynamic Corporation provides the following financial information
Minimum acceptable operating income $520,000
Average total assets $2,000,000
Operating income $705,000
Return on investment 35%
Net sales $825,000
Calculate the residual income of Dynamic Corporation.
A) $1,480,000
B) $305,000
C) $185,000
D) $6,521,250
C .C)
RI = Operating income - Minimum acceptable operating income
Operating income $705,000
Less: Minimum acceptable operating income 520,000
Residual income $185,000
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