Question

1. Determining missing items in return and residual income computations

   Data for Uberto Company are presented in the following table of rates of return on investment and residual incomes:

   Invested Assets		Income from Operations		Return on Investment		Minimum Return		Minimum Acceptable Income from Operations		Residual Income
   $940,000		$244,400		(a)		15%		(b)		(c)
   $520,000		(d)		(e)		(f)		$62,400		$20,800
   $320,000		(g)		14%		(h)		$32,000		(i)
   $240,000		$45,600		(j)		11%		(k)		(l)

   Determine the missing values, identified by the letters above. For all amounts, round to the nearest whole number.

   a.	%
   b.	$
   c.	$
   d.	$
   e.	%
   f.	%
   g.	$
   h.	%
   i.	$
   j.	%
   k.	$
   l.	$

Check My Work2 more Check My Work uses remaining.

Answer 1

Answer-

a.Return on Investment

=( $244,400 / $940,000)*100

= 26%

b. Minimum Acceptable Income from Operations

=$940,000 x 15%

= $141,000

c. Residual Income

= $244,400 - $141,000

=$103,400

d. Income from Operations

= $20,800 + $62,400

= $83,200

e. Return on Investment

= ($83,200 /$520,000)*100

= 16%

f. Minimum Return

= ($62,400 /$520,000)*100

= 12%

g. Income from Operations

= $320,000 x 14%

=$44,800

h. Minimum Return

= ($32,000 / 320,000 )* 100

= 10%

i. Residual Income

= $44,800 - $32,000

= $12,800

j. Return on Investment

=($45,600 /$240,000)*100

= 19%

k. Minimum Acceptable Income from Operations

= $240,000 x 11%

= $26,400

l. Residual Income

=$45,600-$26,400

= $19,200