Zachs, a national manufacturer oflawn-mowing andsnow-blowing equipment, segments its business according to customertype: professional and residential. The following divisional information was available for the pastyear:

Residential

Net Sales Revenue 500,000

Operating Income 61,000

Average Total Assets 188,000

Professional

Net Sales Revenue 1,000,000

Operating Income 151,200

Average Total Assets 378,000

Management has a 23% target rate of return for each division.

First, select the formula to calculate residual income(RI).