The following data is provided on behalf of Mittens Incorporated for last year appear below:

Mittens Incorporated

Statements of Financial Position

For the Year Ended June 2020

Beginning Balance

Ending Balance

Assets:

Cash $135,000 $266,000

Accounts receivable 225,000 475,000

Inventory 314,000 394,000

Plant and equipment (net)940,000 860,000

Investment in Scarf Company104,000 101,000

Land (undeveloped) 198,000 65,000

Total assets $1,916,000 $2,161,000

Liabilities and owners' equity:

Accounts payable $88,000 $119,000

Long-term debt 585,000 665,000

Owners' equity 1,243,000 1,377,000

Total liabilities and owners' equity $1,916,000 $2,161,000

Mittens Incorporated

Income Statement

June 2020

Sales $4,644,000

Less operating expenses 4,291,000

Net operating income 353,000

Less interest and taxes:

Interest expense $90,000

Tax expense 129,000 219,000

Operating Income $134,000

The "Investment in Scarf Company" on the statement of financial position represents an investment in the stock of another company.

Required:

1.Compute the company's margin, turnover, and return on investment for last year.

2.The Board of Directors of Mittens Company have set a minimum required return of 15%. What was the company's residual income last year?