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I can't figure out this question for ROI, residual income using the information I'm given. (Cost accounting) I know the formula for residual income is
I can't figure out this question for ROI, residual income using the information I'm given. (Cost accounting) I know the formula for residual income is Operating Income-(minimum rate of return x operating assets), but how do I do it with this info? My book isn't very clear on how to work it out.
Here's the info:
The following selected data pertain to the Argent Division for last year:
Sales $1,000,000
Variable Costs $624,000
Traceable Fixed Costs $100,000
Average Invested Capital $1,500,000
Imputed Interest Rate 15%
- How much is residual income?
- How much is the return on investment? Enter answer as percentage, rounded to two decimal places.
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