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Lilly Company had sales of $355,000, variable costs of $172,000, and direct fixed costs totaling $118,000. The company's operating assets total $80,000, and its required return is 7.40%. How much is residual income

Respuesta :

Answer: $59080

Explanation:

Firstly, we need to calculate the net operating income which will be:

= $355000 - $172000 - $118000

= $65000

Then, we calculate the desired income which will be:

= $80000 × 7.40%

= $5920

Residual income will be:

= Net operating Income - Desired income

= $65000 - $5920

= $59080