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Calculating Residual Income East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $531,250 Cost of goods sold 280,000
Calculating Residual Income East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $531,250 Cost of goods sold 280,000 Gross margin $251,250 183,400 Selling and administrative expense Operating income Less: Income taxes (@40%) $67,850 27.140 Net Income $40,710 At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000, East Mullett requires a minimum rate of return of 10% Required: For East Mullett, calculate 1. Average operating assets 425,000 2. Residual income -1,790 X
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