Financial information for the year ended December 31, 2021 for one of Haleys Corporations two divisions, the East Division, organized as an investment center, is shown below:Revenues$13,000,000 Service Department Charges 2,000,000 Operating Expenses 4,500,000 Cost of Goods Sold 4,000,000 In addition to the above, total corporate administrative expenses of $400,000 were incurred during the year. The corporate administrative expenses were not directly controllable by either of the two divisions. The management of Haleys Corporation has established an 8% minimum acceptable return for its invested assets. The East Division had $16,500,000 of invested assets on December 31, 2021.

Instructions

Prepare a calculation of the

(a) income from operations

(b) residual income