Billy's Golf manufactures custom golf club sets. Billy's is a division of sports international, Inc. From last year's operations. Billy's reported the following results:

Sales $11,000,000

Variable expenses 8,200,000

Contribution margin 2,800,000

Fixed Expenses 2,360,000

Net operating Income $440,000

Average Operating Income $5,000,000

The company's minimum required rate of return is 10%. Last year's residual income was closest to:

A. ($638,000)

B. $440,000

C. $490,000

D. ($60,000)