Residual Income

The income from operations and the amount of invested assets in each division of Devon Industries are as follows:

	Income from Operations		Invested Assets
Sporting Goods Division	$155,400		740,000
Health Care Division	70,200		390,000
Commercial Division	67,600		260,000

Assume that management has established a 12% minimum acceptable rate of return for invested assets.

a. Determine the residual income for each division.

	Sporting Goods Division			Health Care Division			Commercial Division
Income from operations	$155,400			$70,200			$67,600
Minimum amount of income from operations
Residual income	$			$			$

b. Which division has the most residual income?