Residual Income

The operating income and the amount of invested assets in each division of Conley Industries are as follows:

	Operating income		Invested Assets
Retail Division	$136,800		$720,000
Commercial Division	129,200		760,000
Internet Division	66,000		440,000

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

a. Determine the residual income for each division.

	Retail Division			Commercial Division			Internet Division
Operating income	$136,800			$129,200			$66,000
Minimum acceptable operating income as a percent of invested assets	fill in the blank 1			fill in the blank 2			fill in the blank 3
Residual income	$fill in the blank 4			$fill in the blank 5			$fill in the blank 6

b. Which division has the most residual income?

Commercial DivisionInternet DivisionRetail Division