Calculating Residual Income

East Mullett Manufacturing earned operating income last year as shown in the following income statement:

Sales	$531,250
Cost of goods sold	280,000
Gross margin	$251,250
Selling and administrative expense	180,700
Operating income	$70,550
Less: Income taxes (@ 40%)	28,220
Net income	$42,330

At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000. East Mullett requires a minimum rate of return of 10%.

Required:

For East Mullett, calculate:

1. Average operating assets	$_________________
2. Residual income	$_________________