Guardian Corporation Has Two Major Divisions- Healthcare Products and Pharmaceutical

question 86

Multiple Choice

Guardian Corporation has two major divisions- Healthcare Products and Pharmaceutical Products.It provides the following information for the year. $$\begin{array} { | l | l | l | } \hline & \text { Healthcare Division } & \begin{array} { c } \text { Pharmaceutical } \\\text { Division }\end{array} \\\hline \text { Net sales } & \$ 160,000 & \$ 1,750,000 \\\hline \text { Operating income } & \$ 46,000 & \$ 218,000 \\\hline \text { Average assets } & \$ 320,000 & \$ 5,540,000 \\\hline \text { Target rate of return } & 12.0 \% & 12.0 \% \\\hline\end{array}$$ Calculate the residual income for the Healthcare Division.

• A) $26,800
• B) $7600
• C) $114,000
• D) $46,000

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