SuperPower PC Company makes computers and has two products, the Desktop, and the Laptop. To produce the Desktop, SuperPower PC employed assets of $7,250,000 at the beginning of 2017 and $9,450,000 of assets at the end of 2017. Other costs to manufacture the Desktop include the following:

Direct materials	$240 per unit
Setup	$790 per setup-hour
Production	$150 per machine-hour

General administration and selling costs for the Desktop total $1,540,000 in 2017. During the year, SuperPower PC produced 22,000 Desktops using 7,500 setup-hours and 52,500 machine-hours. It sold these computers for $1,100 each.

Assuming that SuperPower PC defines investment as average assets during the period

Calculate the residual income for Desktop if SuperPower PC has a required rate of return of 24% on investments $2004000

$1576000

$859000

$5584000