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	183,200
Operating income	$68,050
Less: Income taxes (@ 40%)	27,220
Net income	$40,830

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	$