Calculating Residual Income East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales Cost of goods sold $531,250 280,000 Gross margin $251,250 Selling and administrative expense 184,400 Operating income $66,850 Less: Income taxes (40%) Net income 26,740 $40,110 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 425,000 2. Residual income 14,950 X