Calculate residual income

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Question - Zachs, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional information was available for the past year:

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).

Reference no: EM132975211

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