Calculating Residual Income

Pelican 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	190,500
Operating income	$60,750
Less: Income taxes (@ 40%)	24,300
Net income	$36,450

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. Pelican requires a minimum rate of return of 10%.

Required:

For Pelican, calculate:

1. Average operating assets	$fill in the blank 1
2. Residual income	$fill in the blank 2