10.6

Residual Income

The operating income and the amount of invested assets in each division of Conley Industries are as follows:

	Operating income		Invested Assets
Retail Division	$55,100		$290,000
Commercial Division	68,200		310,000
Internet Division	70,000		500,000

Assume that management has established a 12% minimum acceptable return for invested assets.

a. Determine the residual income for each division.

	Retail Division			Commercial Division			Internet Division
Operating income	$55,100			$68,200			$70,000
Minimum acceptable operating income as a percent of invested assets	____			____			____
Residual income	$____			$____			$____